Essential Benefits: Covered and Affordable?

Tuesday, January 6, 2015

The Patient Protection and Affordable Care Act (ACA) established a set of 10 Essential Health Benefits which all insurance companies must cover if they want to participate in the state health insurance marketplaces.  Those 10 benefits are:

  • Ambulatory patient services;
  • Emergency services;
  • Hospitalization;
  • Maternity and newborn care;
  • Mental health and substance use disorder services;
  • Prescription drugs;
  • Rehabilitative and habilitative services and devices;
  • Laboratory services;
  • Preventive and wellness services and chronic disease management; and
  • Pediatric services.


The definition of those benefits varies, however, from state to state and even, in some cases, from plan to plan.  According to a recent study conducted by Universtiy of Pennsylvania health researchers Janet Weiner and Christopher Colameco, consumers in different states have access (or lack access) to different medications, services, and treatment options for a range of conditions.


For pharmaceuticals, plans must cover the greater of two options.  Either:

  • One drug in each U.S. Pharmacopoeia (USP) category or class
  • The same number of drugs in a category and class as a selected benchmark plan in the same state


The essential health benefits requirement makes reference to the number of drugs that must be covered.  It does not address coverage of brands vs. generics or the price of covered products for consumers to pay (co-payments and co-insurance).  The concern for patients and prescribers is that, if the benchmark plan has a narrow formulary, they may have access to few drugs in certain categories.  Many health plans offered in the state health insurance exchanges require patients to pay a percentage, sometimes as much as 50%, of the cost of their specialty pharmaceuticals.  “These formulary designs often result in high costs for patients with chronic illnesses who need biologics and other products on the specialty tier,” explains Dan Mendelson, CEO and founder of Avalere Health.


My question is this: is 50% co-insurance really coverage?  Do patients purchasing insurance in the exchanges truly have access to their pharmaceuticals if they are responsible for half the cost?  And is this a smart way to design benefits when we know that drugs can help lower overall costs?


We currently in the enrollment period ( November/December) for 2015 and we hope that consumers shopping for their benefits will be provided enough information from these state insurers to find affordable insurance that meets their health care needs.

TAGS: BioPharma Executive Education Gary Branning Health Benefits Healthcare