Essential Health Benefits: Balancing Coverage and Cost


Report at a Glance

The Patient Protection and Affordable Care Act of 2010 (ACA) is intended to help uninsured Americans obtain health insurance. As part of this effort, private health insurance plans will be offered to low- and moderate-income individuals and small business employers through state-based “purchasing exchanges,” often with financial help. To ensure a more consistent level of benefits, the ACA requires that certain insurance plans—including those participating in the state purchasing exchanges—cover a package of diagnostic, preventive, and therapeutic services and products that have been defined as “essential” by the Department of Health and Human Services (HHS).

This package—commonly referred to as a set of essential health benefits (EHB)—constitutes a minimum set of benefits that the plans must cover, but insurers may offer additional benefits. The ACA requires that the EHB include at least 10 general categories of health services, and have benefits similar to those currently provided by a typical employer.

The ACA charged HHS with defining what the EHB package should include. To assist with this, HHS asked the IOM to recommend a process that would help HHS define the benefits that should be included in the EHB, and update the benefits to take into account advances in science, gaps in access, and the effect of any benefit changes on cost. The task of the IOM was not to decide what is covered in the EHB, but rather to propose a set of criteria and methods that should be used in deciding what benefits are most important for coverage. The committee recognized that the benefits included in the EHB must be sufficiently inclusive to enable access to essential services but must also be affordable so that as many as possible can purchase the coverage. The committee saw its primary task as finding the right balance between making a breadth of coverage available for individuals at a cost they could afford. This balance will help ensure that an estimated 68 million people have access to care covered by the EHB.