Nicholas Bagley at the Incidental Economist has a good piece on the chaos that punting the definition of Essential Health Benefits. I think he gets it wrong in his conclusion though:
The amendment tells each state to define what counts as essential within the state. State-defined benefits will then set a floor on what insurers can offer, arresting the race to the bottom…..
However you feel about the policy, though, the manager’s amendment is troubling. Start with its irresponsibility. The new rule would apply as of January 1, 2018. But insurers have to create and price their health plans within the next few months in order to get them approved prior to the start of open enrollment. They don’t know which services their states will say are essential and they don’t have time to wait around while their states bicker about it. Insurers are likely to walk. All of them. The individual market in 2018 will be a ghost town.
He is right. Insurers have to submit their 2018 plans for initial approval in late June. They have spent years now learning by doing in the individual market. Most insurers are making fairly modest tweaks to their benefit designs, their networks, their disease management strategies and their pricing. At this point, submitting a mildly tweaked clone of a 2017 plan is not a back breaking amount of effort.
A brand new set of Essential Health Benefits is a massive change in the work effort. Networks would need significant additions if new benefits are included. Networks would need to be examined to identify providers that could be dropped if the actuaries and analytics teams determine that they provide now non-essential benefits and are a magnet for adverse selection. Actuaries would be re-running their pricing models to determine what types of deductibles and other cost sharing is needed to get to a sell-able product. The disease management team would need to shift priorities and resources as the new EHBs will give them a new profile of diseases to manage.
When insurers were building out for the October 1, 2013 launch, exploratory efforts started in 2011 and 2012. Significant building started in the fall of 2012. I was locked into my unhappy place to do Exchange network design and provider configuration in the second week of January, 2013 and stayed there until November 2013.
I don’t think the work load would be as severe as launching the Exchange in the first place. But I know it is more than a 10 week project.
However there is an easy punt. States could legislate that for the 2018 Benefit Year, the essential health benefits for the state are the same as they were for 2017. At that point, 2019 EHB’s could be debated with enough time for insurers to actually build something.