California Exchange Plans Fall Short of Essential Health Benefits

FallShortThose grandfathered health care plans aren’t the only ones that don’t meet the minimum standard for essential-health benefits under the Affordable Care Act, according to a study published in the February 2014 issue of The American Journal of Managed Care.

The study, led by Joshua P. Cohen, PhD, finds that health plan drug benefits in Massachusetts and California don’t meet state and federal requirements for essential health benefits, even though the plans in question were approved. These two states are of special interest to researchers, with Massachusetts being the incubator of this type of reform and California running the largest state-based exchange.

When researchers evaluated the plans against benchmark plans, they found that that health plans in both states are not fully compliant with state and federal rules. Cohen’s group found major plan differences in cost sharing, reimbursement criteria, prior authorization, and quantity limits.

Both states would need to adjust their formularies, with state policymakers taking another try at balancing competing aims of comprehensiveness of coverage and drug affordability. This gets to the heart of the balancing act involved in regulating healthcare. Mandates can drive up costs, but they also ensure that patients get the care they need. The key question for policy makers is how well an essential health benefit approach balances consumers’ desire for an affordable and comprehensive benefit package, while offering flexibility with respect to formulary benefit design and hence leverage for competitive pricing, according to the authors. For more information, visit

Last Updated 08/10/2022

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