Health insurance exchange benefits will be decided at the state level; Kentucky can now proceed to set up its exchange

For months, Kentucky officials have said the state cannot move forward with setting up a health-insurance exchange under the new federal health law because there weren’t enough details about which benefits they had to offer. On Friday, the Obama administration answered that question when it “let states, rather than the federal government, define which medical benefits insurance companies will have to offer consumers starting in 2014,” reports Noam L. Levey of the Los Angeles Times. “This is significantly more state-flexible and friendly than many would have expected,” Alan Weil, head of the National Academy for State Health Policy, told Levey.

The law says that by 2014, each state must offer an insurance exchange, an online insurance marketplace in which people can choose from a variety of plans from companies like Anthem or Bluecross/Blueshield and then, for the most part, be given federal subsidies to help pay their premiums. About 30 million individuals and employees of small businesses are expected to use the exchanges. The plans in an exchange must cover a basic set of benefits, including hospitalizations, emergency care, newborn and maternity care and pediatric services, but until now the federal government could have decided how generous the benefits had to be.
“Under the guidance issued Friday, state leaders can define their own set of benefits by using an existing major health plan in their state as a benchmark,” Levey reports. “That means that some states may require insurers to cover services such as chiropractic therapy and in vitro fertilization, while others may not.”
It’s this variability between states that worries some. “In passing a good deal of the decision-making to states, the administration has guaranteed that Americans will continue to face a patchwork of state regulations that make coverage uneven and inefficient,” report Gardiner Harris, Reed Abelson and Robert Pear in a news analysis for The New York Times.
Some consumer advocates also worry the move will allow states to make benefits too meager. Timothy Jost, a law professor at Washington and Lee University, said the policies “could restrict, for example, the number of covered visits a pregnant woman could make to her obstetrician or which prescription drugs to pay for.”
However, by passing the responsibility on to the states, “President Obama will most likely make his plan for health care reform more politically palatable,” the Times reporters write. “States will be allowed to set benefits at levels similar to what they are now, making coverage not much more expensive than it is today.”
While some Republican state officials were happy with the decision, saying it makes it easier for states to comply with the law, others opposed to the law were critical. “All they’re trying to do is avoid making tough calls before the election,” said Ed Haislmaier, a senior research fellow at the Heritage Foundation. (Read more)
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