So How is "Insurance" Defined- i.e. What is the standard in the Exchange

On this one I'll just highlight some points to think about....

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From the Washington Post's Ezra Klein

The best exchange of the day came moments before the attendees at the Blair House summit broke for lunch. "There is a philosophical difference," Rep. Eric Cantor said. "There is a fear that if you let Washington define what essential health benefits are, there won’t be an end to that."

But is this a philosophical difference? When I interviewed Rep. Paul Ryan, who's one of the Republican participants at the summit, I asked him how his health-care plan ensures that people can trust that the coverage they're buying won't let them down when they get sick. "In the Patient’s Choice Act," he explained, "we do an actuarially equivalent minimum in each exchange that’s equal to the Blue Cross/Blue Shield Standard Option." That seems a lot like how the Senate bill works, I said. "You need to define what insurance is," Ryan replied. "I agree with that."

Everyone agrees with that, in fact. The Wyden-Bennett bill, which many Republicans have co-sponsored, also sets up a basic benefit equivalent to the Blue Cross/Blue Shield Standard Option (politicians like to use this because it's the basic insurance offered in the Federal Employees Health Benefit Program, which all of them use). Similarly, Republicans favor a policy to sell insurance across state lines. That would also mean that there is a single national standard for insurance -- but rather than being decided by Washington, it will be decided by whichever state has the most lax insurance regulations. We'd have a national standard being written by South Dakota's legislature, which would be a strange fate indeed.

Whoever writes the definition, however, both sides agree that someone needs to do: Insurance is a complicated product, and if it's deceptively sold, it can cost people their lives, or their homes. Most of us are not professional actuaries; it's hard for us to truly understand what's contained in the dozens of pages of fine print that our plans contain. We outsource that job to regulators who, we hope, will do some of the work for us. It's not ideal, but it's better than the alternative.

Philosophically, Republicans do have a disagreement with this. It's regulation, after all. But in practice, they accept it. When Republican passed health savings accounts into law, they included definitions of the minimum standards a plan had to meet to qualify. When they passed the Medicare Prescription Drug Benefit into law, they defined what a plan would have to do to qualify for the program. Philosophy is important, but when you're passing legislation, it takes a back seat to making the policy work.

The Senate health-care bill (pdf) explains how it will define essential benefits in Section 1301. It's not particularly detailed:

The Secretary [of Health and Human Services] shall define the essential health benefits, except that such benefits shall include the following general categories and the items and services covered within the categories:

(A) Ambulatory patient services.
(B) Emergency services.
(C) Hospitalization.
(D) Maternity and newborn care.
(E) Mental health and substance use disorder services, including behavioral health treatment.
(F) Prescription drugs.
(G) Rehabilitative and habilitative services and devices.
(H) Laboratory services.
(I) Preventive and wellness services and chronic disease management.
(J) Pediatric services, including oral and vision care.

The other requirement is that the plans have to fit one of the four actuarial values in the Exchange (an explanation of actuarial values). This is, well, a pretty general definition. It doesn't define how your insurance will work. it sets a floor that says insurers have to cover the basic array of things a person needs, and they need to cover a certain percentage of the costs people are expected to need covered (either 60 percent, 70 percent, 80 percent or 90 percent). But beyond that, it's left to the secretary of Health and Human Services.

The reason it's left to the secretary is because, as one Senate aide explained, "legislation is harder to change." If a future Republican administration wants to add a new type of consumer-directed insurance plan to the exchanges, they have the power and flexibility to do so. If an insurer wants to propose an innovative product legislators never dreamed of, the secretary can give them the go-ahead. If the legislation defined any of this precisely, all that would be impossible.

You may ask, of course, why the Secretary needs to be involved at all. Why not just let insurers add products on their own? The answer, basically, is that they'll need technical issues clarified. "When you say the plans need to cover emergency services," the aide says, "health insurers will want to know if an insurer can use financial incentives to encourage people to use primary care rather than go to the emergency room." That's freedom we want to give them, which means we need a human being in the process able to interpret the legislation in light of its goals rather than just in light of its words.

Democrats are trying to strike a balance between offering necessary definition and protections and making certain that insurers can continue to innovate. That's a delicate project, and Republicans can certainly disagree with the precise way that Democrats propose to achieve it. Maybe they don't think that insurers should have to cover pediatric services, for instance.

But there is no disagreement over whether someone needs to define, in broad terms, what counts as health-care insurance. Republicans do it in their bills, Democrats do it in their bills. Cantor is creating a philosophical dispute out of something more properly understood as a practical question, and it's much harder to compromise between philosophies than over operational details.