Will Obamacare Cover That? Depends on Where You Live

If you want your Obamacare plan to cover acupuncture, California is the place to be. If you need foot care, better try Arizona. Plans in Washington, D.C., will pay for weight-loss programs that New York won’t allow, but Obamacare plans in the Empire State will cover surgery to shed those same pounds.

The benefits offered by health plans created under the Affordable Care Act are all over the map. The law requires all health insurers to cover a group of 10 essential benefits in broad categories of medical care, such as hospitalization, prescription drugs, and maternity. Beyond those staples, however, the requirements vary widely from state to state, according to a new report from the Robert Wood Johnson Foundation.

The law instructs each state to select a “benchmark plan” to serve as a model for what other plans in the state must cover. Researchers from the Leonard Davis Institute of Health Economics at University of Pennsylvania examined the benchmark plans to see what’s covered where and found a patchwork that defies logic. Only five states cover weight-loss programs, for instance, while 23 cover a far more expensive obesity treatment: bariatric surgery. Chiropractic care is covered in most states and acupuncture in hardly any, even though both are considered alternative medicine. The inconsistencies affect services for people on the autism spectrum, those seeking infertility treatments, and those in need of hearing aids.

The arbitrary coverage decisions reflect battles fought in each state before the Affordable Care Act was passed, says Janet Weiner, associate director for health policy at the Leonard Davis Institute and co-author of the report. Patients and providers lobby to get certain services considered “mandatory,” while employers and insurers often oppose those expansions of coverage that increase costs.

In theory, the federal government could make Obamacare benefit packages more uniform. But that would require playing the same tug-of-war at the federal level, with a lot more money at stake. “They would have to set up a process in which a lot of these political battles would be fought,” Weiner says, “but they’ve been pretty bloody state to state.”

Insurers have no incentive to offer benefits that aren’t mandated in the individual market because it encourages what economists call adverse selection. If only one plan covers infertility treatments, all the families that need it will choose that plan and paying for their care will drive premiums up.

As a result, we’re left with a system where autism services, including applied behavioral analysis, are covered in half the states, according to data from Autism Speaks (PDF) that was included in the report. The cost of therapies for people with autism can pile unaffordable expenses onto families already dealing with a challenging condition.

The researchers point out that three years ago the Institute of Medicine suggested a process for selecting a national package of benefits that would balance inclusive coverage with affordability. While the Department of Health and Human Services is sticking with the state-by-state approach for 2015, federal health officials may reevaluate for the following year. But trying to make coverage more uniform would be a messy battle, as Weiner points out. “For now, some benefits will remain essential in some states,” the report concludes, “and not essential in others.”

    Before it's here, it's on the Bloomberg Terminal.