The federal health care reform act requires most Americans to have health insurance by 2014. But what exactly will those insurance plans have to cover?
California's Legislature is now grappling with that question, in the wake of last month's U.S. Supreme Court ruling upholding the law.
Under the law, policies sold to individuals and small businesses must cover 10 so-called “essential health benefits,” including hospitalization, maternity care and prescription drugs. (See the complete list of benefits here.) But each state will determine how insurance companies cover those benefits in that state.
California needs to establish those guidelines soon in order to set up the California Health Benefit Exchange, an online marketplace where small businesses and individuals can shop for coverage beginning in October 2013. The guidelines will make it easier for residents to compare plans and avoid buyer's remorse.
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“It’s about removing people’s fear of the fine print that their thing is not going to be covered when they get sick,” said Anthony Wright, executive director of Health Access California, a statewide consumer advocacy group.
Both houses of the state Legislature now are considering bills that would define the scope of health insurance coverage in California. Last week, the Assembly Health Committee passed a bill requiring insurers to cover pediatric vision care, preventive services and mental health services, among other things required by the federal legislation.
“It will set a floor for what is going to be sold,” explained state Sen. Ed Hernandez, D-West Covina, the bill's author.
Hernandez’s bill is similar to a bill sponsored by Assemblyman Bill Monning, D-Monterey, chairman of the Assembly Health Committee. Both bills are making their way through the Legislature.
Both bills also use the coverage already offered by an existing plan – the Kaiser Foundation Health Plan Group HMO – as a benchmark for other insurers to follow. The foundation's plan covers almost all of the essential health benefits the federal rules require, including emergency services, newborn care and laboratory services.
But insurers and consumer advocates in California are battling over the federal mandate requiring plans to cover “rehabilitative and habilitative services and devices.”
While rehabilitation helps people regain skills lost through illness, injury or a disabling condition, habilitation may help a person attain a skill or function never before acquired. For instance, it could involve therapy for a child who is not walking or talking at the expected age.
“If you have somebody with a developmental disability, such as mental retardation or autism, you are not talking about restoring functioning, because the person with the developmental disability may not have the function in the first place,” said Daniel Brzovic, associate managing attorney for Disability Rights California, a nonprofit legal center. “That’s why they say ‘habilitation’ instead of ‘rehabilitation.’ ”
In the past, many health insurance plans have not covered habilitation. “There hasn’t really been habilitative services under private plans,” Monning said. “It’s more been through the Medicaid system, not so much through commercial plans.”
Both bills currently define habilitative services as “health care services that help a person keep, learn or improve skills and functioning for daily living.” The insurance industry argues that definition is too broad, requiring coverage of educational as well as medical services.
“To expand beyond medical services is to invite considerable cost increases, which will be the burden of government and individuals,” said Patrick Johnston, president of the California Association of Health Plans. “Health plans will get the blame, but in fact that cost will be a burden to everyone.”
Last year, California passed mandates requiring health insurers to cover maternity care, including prenatal care, and behavioral treatments for autism. The insurance industry also has argued that behavioral treatments for autism are educational, not medical, and should not be covered by health insurance.
As of July 1, health plans had to comply with the new laws covering maternity care and behavioral treatments for autism. Under the essential health benefits legislation, they will have to continue to provide such coverage.
“It basically ensures that the benefits that families fought so hard to achieve will remain as required benefits for individuals with autism in California, at least until 2015,” said Kristin Jacobson, state policy chairwoman for Autism Speaks, a nonprofit advocacy organization.