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 may have 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 avoid the very administrative procedures that typically serve to constrain the exercise of agency discretion? The answer here is a flat no. The agency’s adroit use of guidance documents instead resulted in a process that was more open to public scrutiny and external oversight than conventional rulemaking would have been.
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Date of this Version
Working Paper Citation
Bagley, Nicholas and Levy, Helen, "Essential Health Benefits and the Affordable Care Act: Law and Process" (2013). Law & Economics Working Papers. 63.
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