ACA benefit programs: will state to state variation be good or bad?

With the passage of the Affordable Care Act (ACA) a larger portion of Americans will be getting health care coverage. For some, such as young adults who can now be kept on their parents’ insurance until 26 (provided their parents have insurance that covers family members!), there has already been benefit. As the 2014 roll-out of the most significant benefits gets closer, there is a lot of focus on the details, including the flexibility given to states to determine the benefits package that companies will have to offer, and whether it will be good or bad.

Writing in the New England Journal of Medicine, Alan Weil, MPP JD (“The value of federalism in providing essential health benefits”)^[1], provides a positive slant on the “federalist” approach to ACA roll-out, in which individual states will have flexibility in choosing which of 10 plans for providing “essential health benefit” (EHBs) they will use. While there are 10 EHBs that must be included, and the state insurance exchanges’ benefits must be based on a “typical insurance plan”, states will have considerable latitude in determining both what is “typical” and what scope to offer for these services; in addition, states will decide whether these plans need to cover benefits beyond those 10, and which they will be. Weil sees this as a good thing, citing the “states as a laboratory for good policy” in the sense that there will be different approaches. He cites 3 benefits: 1) different states, trying different approaches, will see which work “best” in the real world. For example, a single decision made by the federal government on what benefit package to offer (seen as the alternative) would, perhaps, cover treatments that turn out to not be of real benefit to people (he cites autologous bone marrow transplantation as an example of a treatment that was widely covered before it was found to be ineffective); 2) the “typical insurance plan” mandate would make people “have a plan similar to what their neighbors already have”; and 3) it would be consistent with local values. This last is somewhat problematic, since states are hardly very “local”, and have proven themselves to be very willing to enact policies that punish minority points of view (or even majorities, since much power resides, as at the federal level, with those constituencies with the most resources).

In the same issue of NEJM, Jennifer Prah Ruger PhD, writes “Fair enough? Inviting inequities in state health benefits”[2]. She makes many points about potential lack of equity in treatment that are not only possible, but are likely to result from allowing such state-to-state variation. The fact that Weil feels he has already dispensed with the “equity” argument: “The most common, but least convincing, argument against the secretary's federalist approach has to do with equity. It is a truism that state flexibility will yield differences within the country and that those differences cannot be defended on the basis of differing basic human needs for health care services. But those inequities must be viewed in context…” does not make such criticism illegitimate. In fact, Weil is making Prah Ruger’s point, that individuals will suffer negative health consequences because they live in one state rather than another. He sees this as acceptable; she does not. The strongest point that Weil makes is that a single national decision on a benefits package may yield a bad one; Prah Ruger argues that at least it would be consistent. I tend to agree more with her. While some states may have more generous benefits (and even better, since “more generous” is not always better if it provides access to ineffective or harmful services), many – and probably more -- will offer less than a federal program would. The current Medicaid program is a good example of how widely disparate benefits packages can be between states and how much people can suffer from a lack of benefit.

The most important point that Prah Ruger makes derives, interestingly, from Aristotle, the principles of horizontal and vertical equity. Vertical equity means that people with different sets of needs receive different quantity and quality of services (she uses the example of the difference between the treatment needed by people with conjunctivitis and glaucoma to restore “normal ocular function”; perhaps a better one would be between those with myopia and glaucoma). Horizontal equity would require that different people with the same needs have the same treatment options available. She makes clear that such principles do not require that everyone get the same benefits or the same outcomes, but that the principle of proportionality should apply, “…that similar cases should be treated similarly and different cases differently, in proportion to their differences.”

Vertical equity, in which everyone gets the same services whether they need them or not, obviously does not make sense. While the same services should be available to everyone when they need them, whether employed by ACA, a national health insurance system, or private insurance companies, it does not make sense to offer the wrong services to people when they are more expensive, nor is it reasonable to offer inadequate services because they are less effective. Understanding the relative cost and benefit of services to different people in different sets of circumstances is critical to both containing cost and increasing quality. A very interesting “Viewpoint” on this issue is offered by Robert H. Brook, MD ScD in JAMA (“Do physicians need a ‘shopping cart’ for health care services?”^[3]). He describes the on-line shopping most of us are familiar with, which gives us the cost of the items that we are interesting in purchasing, offers us both alternatives and other options that “people who bought this item might be interested in”, and tabulates what we have ordered in our shopping cart. And gives us at least two opportunities to not order, by asking us to confirm our intention. He does not argue that physicians should always order cheaper tests or therapies, but by knowing what the “basket of services” they are ordering for patients would cost, both for the patient and the insurer (“For example, if the insurance company paid the pharmacy $80 and the patient paid $8, the cost of this service is $88,”), they would have a better sense of what was of most value.

Horizontal equity, however, is really the most important issue. The absence of this characteristic is the fatal flaw in our current “system” and is likely to continue even with ACA. It means that everyone doesn’t get the most appropriate therapy for their condition, but rather that some people do not get enough, while others may get too much and even suffer ill effects as a result. Despite scare stories about rationing, the fact is that we have always had rationing, but it has been on the basis of the resources (mainly financial) a person has rather than on the basis of need. The problem with having different options in different states is that it will be the most disenfranchised who lose out in the states with meaner benefit packages, while those with resources will be able to access care.

Making the right care available to all the people who need it is the only reasonable goal for a health system. The rest is distraction.

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[1] Weil A, The value of federalism in defining essential health benefits.,N Engl J Med. 2012 Feb 23;366(8):679-81

[2] Ruger JP, Fair enough? Inviting inequities in state health benefits.,N Engl J Med. 2012 Feb 23;366(8):681-3

[3] Brook RH, Do physicians need a "shopping cart" for health care services? JAMA. 2012 Feb 22;307(8):791-2.