An Institute of Medicine (IOM) committee emphasized that affordability should be Health and Human Services’ (HHS’) main priority in its recommendations to the agency on how the basic coverage standards for the state-based health insurance exchanges should be established.

Under the federal health reform law, states by January 2014 must create insurance exchanges that provide coverage options for individuals and small businesses. States can choose to administer their own exchanges, for which they must have some infrastructure in place by January 2013, or ask the federal government to run the exchanges for them.

The IOM committee also noted that the cost of any new benefits should be “offset by savings” elsewhere in the health system. The report recommended that only medically necessary services be covered; however, it did not outline the types of benefits that HHS should include in the health plans offered through the exchanges.

The committee did include guidelines for HHS on how to define essential benefits, noting that minimum benefits should reflect those provided by small employers in the private market, rather than by large or medium-size employers that offer more generous coverage. Recommendations stated that federal officials should determine what the national average premium of a typical small employer plan in 2014 would be and attempt to limit the national average cost of essential benefits below that threshold.