In at least two states, policymakers have tacitly made an interesting statement: our state employee health plan is the best insurance policy in the state.
Maryland and Utah selected their state employee health coverage as the benchmark for the essential health benefits—10 categories of care, such as emergency services and prescription drugs, outlined in the Affordable Care Act (ACA)—that must be covered by insurance plans sold on the states’ health exchanges.
Monday was a soft deadline for states to tell the U.S. Department of Health and Human Services (HHS) what their benchmark would be. According to Avalere Health, an independent consulting firm, 23 states have selected a benchmark plan, 8 states are actively discussing which to pick, three have said they won’t choose a benchmark and 17 are doing nothing (see map below).
States can choose between four options when setting a benchmark: a state employee plan, one of the three largest small-group plans in the state, the largest HMO plan in the state or one of the federal employee plans. Insurance policies sold on the exchanges must then offer coverage that is equivalent to or greater than the benchmark plan in each of the 10 coverage areas.
So far, Maryland and Utah are the only states to select the state employee plan as their benchmark.
"The general concepts that states are weighing are comprehensive coverage versus affordability," says Lisa Murphy, senior manager for Avalere's health reform office. "They're looking for the best option that provides the best of both worlds."
Maryland found that balance in the public plan.
In a presentation for the Maryland Health Care Reform Coordinating Council, co-chaired by Lt. Gov. Anthony Brown and tasked with selecting the state’s benchmark, stakeholders laid out their reasons for endorsing the state employee policy. While generally matching private and federal plans in some of the most-used categories like prescription drugs, the state employee plan proved more comprehensive and generous in others. For example, the state plan covers skilled nursing for 180 days a year—far greater than the federal employee plans. It also included in vitro fertilization and smoking cessation drugs, coverage left out of the small employee and HMO policies.
Although the state employee plan went beyond its benchmark peers in some areas, the estimated impact on premiums for plans sold on the exchanges was negligible: an additional $1.50 to $2 per month per person. The decision had the support of an advisory board that included health-care providers, patient groups and insurance companies.
"That balance between comprehensiveness and afforability, that's a difficult balance because as things become more comprehensive, they usually become more expensive," says Brown. "We thought that the state plan's impact on costs was still an acceptable tolerance for affordability."
Officials in Utah, which already had a health exchange prior to the ACA and joined in the lawsuit to overturn the law, declined to comment on their benchmark selection. The state has not released an official rationale for the decision.
State plans as benchmarks have proved to be the exception, not the rule, though, and Avalere's Murphy says that will likely continue. The reason? State employee plans are often exempt from state mandates that other small-group plans must meet, and HHS has said benchmark plans must satisfy those mandates. Maryland is one state where the state employee policy does comply with its state's mandates, which cover things like hair protheses and low-protein formulas for young children.