Affordable Care Act Results in Patchwork of Coverage for Children

An article published recently in Health Affairs is the first to investigate the Affordable Care Act’s (ACA) Essential Health Benefit (EHB) as it relates to children. The study — which was led by George Washington University’s Sara Rosenbaum, JD, and included contributions from CHOP PolicyLab experts Kathleen Noonan, JD, and David Rubin, MD, MSCE — found the EHB has resulted in a state-by-state patchwork of coverage for children and adolescents that has significant exclusions, particularly for children with developmental disabilities and other special needs.

Previous studies have compared the EHB standard more broadly to the Children’s Health Insurance Program (CHIP), but this analysis presents the detailed evidence regarding the types of exclusionary practices that limit the effectiveness of coverage for children insured through health plans sold in the individual and small group markets. CHIP “provides low-cost health coverage to children in families that earn too much money to qualify for Medicaid,” according to Healthcare.gov. As of 2013, there were roughly eight million children enrolled in CHIP nationwide, with more than 200,000 in New Jersey and 250,000 in Pennsylvania.

“The Affordable Care Act offers great promise for kids, but we are concerned that its intended benefits are not fully realized for children,” said the study’s lead author, Aimee M. Grace, MD, MPH, a pediatrician and fellow at Children’s National Health System. “We sought to understand which pediatric services are covered, and which ones are excluded, by health insurance plans in the health insurance Marketplaces.”

“Pediatric services” is one of ten benefit classes required by the Affordable Care Act that must be covered in all health insurance plans sold in the individual and small-group health insurance Marketplaces.  However, other than oral health and vision care, neither the ACA nor the regulations for implementing it define “pediatric services”.

And while the Affordable Care Act gave the U.S. Department of Health and Human Services (HHS) Secretary the ability to define a pediatric benefit standard at the national level, HHS chose instead a state-by-state benchmark plan approach akin to CHIP, which affords greater discretion to both states and payers.

In the Health Affairs study, the researchers found that the state-by-state approach has led to great variation in coverage. For example, 25 states specifically cover treatments for congenital defects, and 24 specifically include coverage for both autism spectrum disorder (at least in part) and hearing aids. There is also great variation among states regarding exclusion of certain pediatric services. For example, 13 states specifically exclude services for children with learning disabilities, and 10 states exclude speech therapy for developmental delays, stuttering, or both.

Stitching the Patchwork

“This benefit patchwork means significant state-to-state variation in what will be covered for children with special needs,” said Rosenbaum.

The analysis suggests four potential steps:

1. Pediatric treatment limits and exclusions, particularly exclusions based on mental retardation, mental disability, or other developmental conditions, should be barred.
2. The concept of “medical necessity” should be incorporated into the defined pediatric benefit. Medical necessity should include not only the clinical utility and appropriateness of a covered service, but also whether the service is appropriate in the pediatric developmental health context.
3. The essential health benefits standard for pediatric services should be revised to address covered services, particularly for children with special needs, and actuarial value (the percentage that the average person can expect the plan to cover).
4. The use of CHIP plans as a benchmark plan for pediatric services should be permitted.

HHS made a commitment to review its “benchmark plan” approach for the 2016 plan year. At this time, HHS could define a pediatric benefit standard at the national level. Establishing a benefit standard has important implications for the eight million children who currently receive their health insurance coverage through CHIP, whose funding has not been extended beyond 2015.

If this funding were not extended, many of these children would enter the Marketplaces for their insurance coverage. For these children, as well as the children already covered by plans in the Marketplaces, the appropriateness of the essential health benefits standard for children is one of the most important issues in child health policy today.

“With Congressional debate expected about whether to extend funding for CHIP beyond fiscal year 2015, how well the pediatric services element of the essential health benefits standard addresses the needs of children will be an important factor to consider,” said PolicyLab’s Noonan.