The National Academy of Sciences said that the federal government should explicitly consider cost as a factor in deciding what health benefits must be provided by insurance plans under President Obama's health care overhaul, and it said the cost of any new benefits should be "offset by savings" elsewhere in the health care system. Moreover, it said, in defining "essential health benefits," the government should try to guarantee that the average premium would not exceed benchmarks that would be set by the secretary of health and human services.
In a new report, the academy's Institute of Medicine does not list specific services that should be covered. Rather, it tells the secretary of health and human services how to define the minimum benefits. That is a huge decision that could affect 68 million people, including individuals, families and businesses that obtain coverage through new state-based insurance exchanges.
"Costs must be taken into account," the 18-member panel said. "Unless we are able to balance the cost with the breadth of benefits, we may never achieve the health care coverage envisioned in the Affordable Care Act. If the benefits are not affordable, fewer individuals will buy insurance. And if health care spending continues to rise so rapidly, the benefits will begin to erode."
The expert panel said the government should initially define "typical employer plan" as the type of coverage commonly provided by small employers — not by large or medium-size businesses, which often provide more generous coverage. Moreover, it said, federal officials should determine what the national average premium of typical small employer plans will be in 2014 and ensure that the national average cost of the minimum benefits does not exceed that amount.
This reading of the law was unexpected, but the panel said it was justified because small businesses "will be among the main customers for policies in the state-based exchanges." The recommendation is likely to please employers and insurance companies and could cause concern among some advocates for consumers and patients with particular illnesses who want more expansive benefits. The proposal could also help the Obama administration as it struggles to defend the new health care law, under attack in court, in Congress and in many state legislatures.
Critics of the federal law, including Republican candidates for president, say its costs will explode and put added financial pressure on the federal government, which will subsidize private insurance premiums for millions of people. The report gives the Obama administration a potential tool to help control those costs. E. Neil Trautwein, a vice president of the National Retail Federation, a trade group, said, "We are encouraged that the panel kept cost and affordability paramount."