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The Essentials

Under the direction of the Patient Protection and Affordable Care Act of 2010 (PPACA), individuals and small businesses are to receive a certain package of diagnostic, preventive, and therapeutic services and products that are defined as “essential” by the Department of Health and Human Services (HHS).  HHS requested the assistance of the Institute of Medicine (IOM) with the development of a process to define and update this package of essential health benefits (EHB).

Source: Unknown

Source: Unknown

A prior Labor Department report was unable to determine a “typical” benefits package from among the various 3,200 employer-sponsored health plans surveyed.  By means of its latest report, the IOM laid out two goals for defining the EHB: (1) providing health insurance coverage for a wide range of health needs and (2) making health insurance benefits affordable. It recommended that the methods used by HHS be highly visible through a public deliberation process involving small group meetings around the country.    Such involvement of stakeholders and enrollees would allow for the priorities of the enrollees themselves to be taken into account when tradeoffs become necessary.  The IOM recommended that only medically necessary services be covered as determined on an individual basis, that the package be based on credible evidence of effectiveness, and that the package be updated annually to promote better health outcomes for both individuals and the broader population.

The IOM recommended that HHS develop a plan to identify data needs and a research agenda that will support this updating process.  Updates should also account for changes in provider payment rates, financial incentives, practice organizations, and other relevant matters.  Additional services that get added to the essential health benefits package should be offset by the elimination of outmoded or unnecessary services.

States that administer their own insurance exchanges would be able to modify the federal package, though not significantly.  Finally the IOM recognized that as the EHB is remain affordable and sustainable, the long standing problem of rising health care costs would need to be addressed aggressively in order to achieve the goal of a reduced uninsured population.


Similar to the deliberation process concerning the preventative services now under mandated coverage by the Affordable Care Act, the process concerning the development essential health benefits (EHB) package might become political and socially charged – especially once the input of interest groups becomes apparent.  However the difference between the two can be found in how we approach the comprehensiveness of essential health benefits.  While the United States Preventative Services Task Force seeks to recommend all evidence-based preventative services, it should not be the goal of the new Benefits Advisory Council to include all services deemed scientifically worthy.  Instead the EHB package must specifically take into account the costs of services as it is updated each year.

The comprehensiveness of any essential benefits package cannot therefore be universal and is influenced by the strength of our economy.  The EHB package is meant to be a minimum set of benefits, and should be differentiated from an ideal, full set of benefits that many patients, health care consumers, and doctors might desire.

Instead of approaching the package as being comprised of all medically necessary services, the approach should be to eliminate and substitute out any diagnostic and treatment modalities that are not medically necessary. Likewise, it becomes critical to compare the benefit and necessity of services against each other.  Therefore the public deliberation process must be infused with not only the evidence of effectiveness of each health care service, but also the evidence of health care costs, independently and comparatively.

Essential Health Benefits: Balancing Coverage and Cost. The Institute of Medicine. Oct 2011; National Academies Press.

Inglehart, JK. Defining Essential Health Benefits — The View from the IOM Committee. NEJM. 2011; 365:1461-1463.


Kameron Matthews, MD, Esq.

Kameron Matthews, MD, JD, FAAFP
About Kameron Matthews, MD, JD, FAAFP

Lead Analyst – Access to Care Kameron Matthews MD, JD is a board-certified family physician and currently serves as Deputy Executive Director of Provider Relations and Services in the Office of Community Care at the Veterans Health Administration in Washington, DC. She earned her medical degree from Johns Hopkins University and her law degree from the University of Chicago. Contact: Facebook | Twitter | More Posts

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