Emergency Regulations Ensures Competitive Health Insurance Market in California

California Insurance Commissioner Dave Jones announced that his department has been granted emergency regulations to mandate that all new health insurance policies that go into effect as of January 1, 2014 will include the same 10 Essential Health Benefits (EHB) as the plans offered through Covered California. The Affordable Care Act mandated that all plans offered through state exchanges eligible to receive federal tax credit subsidies had to include the EHBs. But because each state regulates there own insurance industry, there was the possibility that health insurance plans offered outside of the exchange may not have had to include all the benefits.

Emergency regulations for competition

The emergency regulations force all “non-grandfathered” plans to include the 10 EHBs which means that plans offered through Covered California won’t be put at a substantial competitive disadvantage. Plans not offering all the benefits would have been priced lower than plans in the state exchange. While health insurance plans offered outside the Covered California may still be less expensive for a variety of reasons, at least they will have equivalent benefit designs.

Each state regulates insurance industry

It’s critical that each state either pass certain laws or regulations to bring their health insurance industry into parity with the Affordable Care Act. Without the necessary law or regulation, some states will see health insurance plans offered that that are less in price and benefits than those offered in the exchange. This will have the effect of siphoning enrollment from the subsidized plans because of lower prices and the plans will have fewer covered benefits as well. At least in California, whether the plan is purchased in or out of the exchange, the new member will be getting the same benefits.

The full text of Commissioner Jones News Release:

June 17th, 2013

Emergency Regulation Requires Health Insurers to Provide Coverage for Essential Health Benefits

SACRAMENTO – Insurance Commissioner Dave Jones today announced the approval of an emergency regulation filed by the Department of Insurance with the Office of Administrative Law requiring health insurers to cover all essential health benefits for new policies in effect after January 1, 2014. The Affordable Care Act requires non-grandfathered health insurance policies offered in the individual and small group markets (both inside and outside of the Health Benefits Exchange) provide coverage for a comprehensive package of healthcare benefits, known as essential health benefits. The emergency regulation is a critical element of Affordable Care Act implementation.

“Our essential health benefits emergency regulation ensures all Californians purchasing individual or small group health insurance policies will have coverage for a comprehensive set of health benefits when they need medical care,” said Commissioner Jones. “In the past, some policies have included very limited or no coverage for important healthcare services. Starting in January all the new health insurance policies will cover 10 broad categories of essential benefits that will meet most healthcare needs. Issuance of the emergency regulation is a critical step in the implementation of the Affordable Care Act, because it provides the legal authority for the department to implement the essential health benefits requirement as we review new health insurance policies sold, including those in the Exchange.”

10 categories of benefits that make up the essential health benefits coverage, including:

1.  Ambulatory patient services
2. Emergency services
3. Maternity and newborn care
4. Prescription drugs
5. Hospitalization
6. Laboratory services
7. Pediatric services, including oral and vision care
8. Rehabilitative and habilitative services and devices
9. Preventive and wellness services and chronic disease management

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