Essential Health Benefits

 States have determined the minimum set of benefits to be included in individual and smallgroup insurance plans. 

The Affordable Care Act requires that health insurance plans sold to individuals and small businesses provide a minimum package of services in 10 categories called “essential health benefits.” These include hospitalization, maternity and newborn care, ambulatory care, and prescription drugs.

But rather than establishing a national standard for these benefits, the Department of Health and Human Services (HHS) decided to allow each state to choose from a set of plans to serve as the benchmark plan in their state. Whatever benefits that plan covers in the 10 categories will be deemed the essential benefits for plans in the state.

This approach has drawn criticism from health care providers, consumer groups, and patient advocates, who would prefer a national standard. But it has been more welcomed by states and the business community, who appreciate the flexibility that the arrangement will afford states to tailor benefits to local circumstances.

This Health Policy Brief explores the background of the debate and the policy implications surrounding essential health benefits, and was published online on May 2, 2013 in Health Affairs.