20 Pages Posted: 18 Jan 2013 Last revised: 1 Sep 2016
Date Written: January 17, 2013
Beginning in 2014, the Affordable Care Act (ACA) will require private insurance plans sold in the individual and small-group markets to cover a roster of 'essential health benefits.' Precisely which benefits should count as essential, however, was left to the discretion of the Department of Health and Human Services (HHS). The matter was both important and controversial. HHS nonetheless announced its policy on essential health benefits by posting on its website a 13-page bulletin stating that it would allow each state to define essential benefits for itself by choosing a 'benchmark' plan modeled on existing plans in the state. On both substance and procedure, the move was surprising. The benchmark approach departed from the uniform, federal standard that the statute appears to anticipate and that many informed observers expected HHS to adopt. And announcing the policy thorough an internet bulletin arguably allowed HHS to sidestep orthodox administrative procedures, including notice and comment, White House review, and preenforcement review in the courts.
What are we to make of this? This chapter explores two questions. First, is the benchmark approach a lawful exercise of HHS’s authority under the ACA? Although HHS has brushed up against the limits of its discretionary authority, we conclude that the approach likely will (and, in our view, should) be upheld in the event of a challenge. Second, did HHS’s announcement of the benchmark approach through an internet bulletin allow the agency to sidestep the administrative procedures that are meant to shape the exercise of its discretion? The answer, we believe, is no. The agency’s use of guidance, in the context of a broader effort that also included significant public engagement, led to a process that was more open to public scrutiny and external oversight than conventional rulemaking would have been.
Keywords: Affordable Care Act, administrative law, health law, essential health benefits, subregulatory guidance
JEL Classification: K23, I18, K32
Suggested Citation: Suggested Citation
Bagley, Nicholas and Levy, Helen, Essential Health Benefits and the Affordable Care Act: Law and Process (January 17, 2013). U of Michigan Public Law Research Paper No. 302; U of Michigan Law & Econ Research Paper No. 13-003. Available at SSRN: https://ssrn.com/abstract=2202387 or http://dx.doi.org/10.2139/ssrn.2202387