WASHINGTON — The Department of Health and Human Services (HHS) said last month it would not define a single uniform set of “essential health benefits” that must be provided by health insurers for tens of millions of Americans.

Instead, the agency will allow each state to specify the benefits within broad categories.
The move, which many who have been closely following the health care debate say came as a surprise, would allow significant variations in benefits from state to state, similar to the current differences in state Medicaid programs and the Children’s Health Insurance Program.

By giving states discretion to specify essential benefits, HHS is seeking to deflect critics of the plan’s contention that President Obama’s health care reform law imposes a rigid, bureaucrat-controlled health system on Americans and threatening the quality of care.

“Under the Affordable Care Act consumers and small businesses can be confident that the insurance plans they choose and purchase will cover a comprehensive and affordable set of health services,” HHS Secretary Kathleen Sebelius says. “Our approach will protect consumers and give states the flexibility to design coverage options that meet their unique needs.”

Under the department’s plan, states could select an existing health plan to set the benchmark for the items and services included in the essential health benefits package.

Sebelius laid out several options that states could use as a benchmark: one of the three largest small group plans in their state; one of the three largest state employee health plans; one of the three largest federal employee health plan options; or the largest HMO plan offered in the state’s commercial market.

Health care reform advocates say they hope that HHS’ flexibility will blunt opponents’ criticism that the federal government is forcing a one-size-fits-all standard for health insurance and usurping state authority to regulate the industry.