Short Paper 7: The ACA and Essential Benefits for Children in the Exchanges

Executive Summary

The Patient Protection and Affordable Care Act (ACA) creates a new mechanism for individuals and small businessesto compare different health insurance packages and purchase coverage: the Exchanges.1 States will receive federal funding to assist with establishing the Exchanges and will have considerable flexibility in operating them. One requirement of all insurers offering plans for purchase through the Exchanges, however, is the coverage of the ?essential benefit package.? Although the ACA lists the services that, at a minimum, must be included in the essential benefit package, the Secretary of Health and Human Services will define the package fully. This definition, which the Secretary is considering with assistance from the Institute of Medicine, will decide much about the scope of coverage provided by plans in the Exchanges.2 Ensuring a robust and comprehensive essential benefit package is critically important for children, especially those who are low-income and/or who have special health care needs. 
This issue brief will examine the components of an essential benefit package for children, propose that Medicaid should serve as a model for the scope of services, and make recommendations for the Exchanges. 
ACA §§ 1301, 1302 and 1001
Section 1301(a)(1)(B) of ACA requires that all plans participating in the Exchanges, known as ?qualified health plans,? must provide essential health benefits. Section 1302 defines the characteristics of an essential benefit package; limits cost-sharing for such coverage; and provides for either a bronze, silver, gold or platinum level of coverage.3 This section also requires the Secretary to define the essential health benefits, which must include at least the following: ?ambulatory patient services, emergency services, hospitalization, maternity and newborn care, mental health and substance abuse treatment, including behavioral health treatment, prescription drugs, rehabilitative and habilitative services and devices, laboratory services, preventive and wellness services and chronic disease management, pediatric services including oral and vision care.?4 In defining the benefit package, the Secretary must ensure that the scope of benefits is equal to ?the scope of benefits provided under a typical employer plan.?5  The Secretary of Labor shall conduct a study of employer-sponsored coverage to inform this consideration. 6
 
Section § 1001 of ACA, adding Section 2713 to the Public Health Service Act, also informs the benefits that will be covered by Exchange plans. This section, which applies to both group and individual plans (thus covering plans both inside and outside of the Exchanges) requires coverage of preventive services with no cost-sharing.7 For children, the law specifies that this includes services recommended by the United States Preventive Services Task Force, immunizations recommended by Centers for Disease Control and Prevention, and preventive care and screenings in Bright Futures, guidance developed by the American Academy of Pediatrics and the Health Resources and Services Administration.8 Interim final rulesissued jointly by the Departments of Health and Human Services, Treasury, and Labor clarified that this coverage must be offered without cost-sharing for plan years beginning on or after September 23, 2010.9
 
Beyond these parameters, much is left to be decided about the essential benefit package. Advocates must ensure that the service package is defined in a broad and comprehensive way so as to adequately meet low-income children?s unique health and developmental needs. Children with special health care needs must be able to obtain comprehensive coverage consistent with evolving standards of care and evidence-based treatment. 
 
Which children will get coverage through the Exchanges? 
Children of families with varying levels of income will be able to obtain coverage through the Exchanges. The ACA provides government subsidies in the form of premium tax credits, as well as cost-sharing reductions, for families with incomes below 400% federal poverty level (FPL).10 An estimate by Georgetown Center for Children and Families concludesthat more than half of the people who get coverage through the Exchanges (approximately 66% or 19 million people) will be eligible for subsidies, while 17% will enroll through their small business employer and 17% will have unsubsidized coverage.11 While all children below 133% FPL will be eligible for Medicaid in 2014, and thus ineligible for subsidies, many between 134 and 400% of FPL will be covered through the Exchanges. Particularly in states that have income eligibility cut-off levels below 200% FPL in their Children?s Health Insurance Programs (CHIP), such as Idaho, North Dakota, Alaska and Oklahoma, children between 134 and 200% FPL will seek coverage through the Exchanges.12 Although many otherstates cover children up to 250% FPL (or higher)in their CHIP programs, it is likely that at least some of these children will look to the Exchangesfor coverage.13 Further, children who are above the income eligibility cut-off for 
CHIP but below 400% FPL will be eligible for subsidies in the Exchanges.14 Many low-income, legal immigrant children who are otherwise eligible for Medicaid and CHIP, but are subject to a five-year bar on entering those programs, may also obtain coverage through the Exchanges.
What should the benefit package look like? 
It is well established that low-income children are more likely to have poor health than other children.15 Publicly-insured, low-income children have a higher prevalence of special health care needs and conditions such as obesity, asthma, and attention deficit hyperactivity disorder.16 Low-income children are at greater risk for dental problems, such as toothaches and infection, elevated blood lead levels, behavioral health problems and extreme prematurity, which can result in a host of long-term disabilities and limitations.17 Moreover, children?s health care needs are different from adults? and require a tailored benefit package. Given these complex and evolving needs and the significant number of low-income children who will be covered through the Exchanges, it is imperative that all participating plans offer a comprehensive essential benefit package for children. 
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