In Election Year Maneuver, Sebelius Eases ObamaCare Burden on States

The Department of Health and Human Services (DHHS), under Secretary Kathleen Sebelius, released a surprising bulletin on Friday, announcing that states will have greater flexibility in implementing ObamaCare.

The announcement comes on the threshold of the presidential election year, when President Obama must defend his signature legislation both to the Supreme Court, which will take up the constitutionality of the law in the spring, and the American people, the majority of whom want the law repealed. The administration likely hopes that the new flexibility offered to states will help to minimize the perception that the federal government is “taking over” healthcare.

Regarding the announcement, Secretary Sebelius said:

Under the Affordable Care Act, consumers and small businesses can be confident that the insurance plans they choose and purchase will cover a comprehensive and affordable set of health services. Our approach will protect consumers and give states the flexibility to design coverage options that meet their unique needs.

DHHS states that its new “intended approach” will allow states, rather than the federal government, to select a “benchmark” essential health care plan, from a list of four allowable possibilities:

• One of the three largest small group plans in the state;
• One of the three largest state employee health plans;
• One of the three largest federal employee health plan options;
• The largest HMO plan offered in the state’s commercial market.

In keeping with the law, states must ensure that their “essential health benefits package” covers items and services in at least 10 categories of care, including preventive care, emergency services, maternity care, hospital and physician services, prescription drugs, mental health, substance abuse treatment, and rehabilitation for cognitive and physical disorders. If a state’s chosen “benchmark” plan does not cover all 10 care categories, other “benchmark” plans must be explored. The idea is that states must choose a “benchmark” plan that will be equal in scope to a typical plan offered by an employer in their state. All health plans within a state must offer the “essential health benefits package,” regardless of whether the plans are sold inside or outside the Health Insurance Exchanges, the virtual insurance marketplaces that states are mandated to set up under ObamaCare.

As might be expected, the “news” from DHHS was met by deep concern from supporters of ObamaCare, who had hoped for more federal uniformity and less state flexibility. Nevertheless, some Republican analysts believe the new policy would give states the power to impose yet more benefit mandates, rather than fewer, leading to even higher insurance costs.

The new bulletin addresses only the services that must be covered in a state “benchmark” health plan, but not the financial aspects such as deductibles, copayments, and coinsurance. DHHS states that these issues will be addressed in future bulletins.

This announcement is clearly politically motivated and cosmetic at best. It simply transfers the appearance of the mandate to the states which, in addition to setting up the Health Insurance Exchanges, will also now be expected to come up with an “essential benefits package.” Of course, most of the package is already dictated by the federal government.

This new policy, dressed up in language that sounds like a Hallmark card, i.e., “give states the flexibility to design coverage options that meet their unique needs,” underscores once again that ObamaCare is a 2,000 page law, the rules of which are being made up as they go along. In the same way that Attorney General Holder had no idea that “Fast and Furious” was happening, that Jon Corzine had no idea where the $1.2 billion went, Kathleen Sebelius has no idea which policies will be part of ObamaCare. As we can see, the policies will be rolled out depending upon the politics of the moment.

Now, apparently, the administration is playing defense.