Empowering the states to select essential health benefits.

In the heat of the controversy surrounding the botched rollout of HealthCare.gov and the various ACA delays, it’s easy to forget one of the Obama administration’s most significant and controversial implementation decisions: the choice, back in 2011, to delegate to the states the power to pick what would count as “essential health benefits.”

Helen Levy and I have a new article (blissfully ungated) in the Journal of Health Politics, Policy and Law that explores that decision. The source of the controversy is the vagueness of the ACA’s requirement that health plans sold in the individual and group markets must cover “essential health benefits.” Apart from an open-ended list of required coverage categories (like “hospitalization” and “prescription drugs”), the ACA doesn’t specify which benefits should count as essential.

Instead, the ACA delegates to the Secretary of HHS the authority to adopt a more granular definition. That delegation put the Secretary in a tough spot. A narrow definition of essential health benefits would limit some treatment options, potentially ticking off both patients and providers. A broad definition, however, would drive up the cost of health plans, which could put insurance out of the reach of the very people the ACA was designed to help.

So the Secretary delegated to the states the authority to choose what would count as “essential” within their borders. The decision was a “major surprise”—indeed, it was the first in a long string of implementation decisions to make front-page news. But punting to the states got the Secretary out of the delicate business of distinguishing essential from non-essential benefits.

In the article, Levy and I ask two questions. First, was it legal for the Secretary to defer to the states on what counted as “essential health benefits”? Even today, the question is of some urgency. Someone who can’t secure exchange coverage in her state for a desired treatment might well have standing to sue. Such a plaintiff could build a plausible legal argument that deferring to the states runs contrary to a statute that, at a number of points, anticipates that the Secretary would adopt a national, uniform slate of essential health benefits. On balance, however, a close analysis of the ACA suggests that the Secretary’s choice—although it may have come close to the line—was lawful.

Second, was it improper for the Secretary to use a spare, 13-page internet bulletin to announce the decision? Did using the bulletin allow her to avoid procedural hurdles—the obligation to give notice and take comments, White House oversight, and judicial review—that are meant to shape how HHS exercises its authority? Here, we conclude that the answer is no, and that the unorthodox process that HHS employed was more open to public scrutiny and institutional oversight than conventional rulemaking would have been.


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