the core problem in ACA plans. The problem is not that the insurer uses
ambiguous terms, or even that the policyholder interprets those terms
differently. Rather, the insurer cannot wholly describe the coverage and the
policyholder cannot form concrete expectations. The problem is the vague
nature of coverage.
Vague terms present a more difficult problem than do ambiguous terms.
Professor Farnsworth defined vague language as terms that are imprecise in
marginal applications.108 However, EHB categories are vague in almost
all their applications, not only in marginal ones. Indeed, EHB categories are
so general as to be nearly meaningless.109 They offer only generic
boundaries with little hint as to their specific content.110 Consider the
EHB categories of ambulatory patient services, hospitalization, maternity
and newborn care, and rehabilitative and habilitative services and
devices.111 A policyholder can only learn exactly what illnesses, injuries,
and therapies an insurer includes in these categories at the time – or shortly
objectively reasonable expectation, considered in light of permissible extrinsic evidence.
Stempel, Swisher & Knutsen, supra note 8, at 131; Restatement (Second) of Contracts § 206
(1981); Rahdert, Revisited, supra note 45, at 116–17 (discussing the ambiguity rule in the
context of insurance).
108. See E. Allan Farnsworth, ‘Meaning’ in the Law of Contracts, 76 Yale L.J. 939,
952–55 (1967) (identifying three types of imprecise contract language: vague terms;
ambiguous terms; and ambiguous syntax); see also Jerry & Richmond, supra note 7, at 126–
67.
109. See Stempel, supra note 45, at 264 (“Many insurance policy provisions, even those
routinely enforced by courts, simply are not clear unless one understands the nature of the
insurance product and the background of the specific contract.”).
110. See id. Four EHB categories have been somewhat more fully defined. Most
specific are Federal regulations requiring coverage of preventive services recommended by
the U.S. Preventive Services Task Force. See Recommendations for Primary Care Practice,
U.S. PREVENTIVE SERVS. TASK FORCE (Oct. 2014), http://
www.uspreventiveservicestaskforce.org/Page/Name/recommendations. Some contraceptive
services listed met with considerable controversy. See Exemption and Accommodations in
Connection with Coverage of Preventive Health Services, 45 C.F.R. § 147.131(a) (2013);
see also Burwell v. Hobby Lobby Stores, Inc., 134 S.Ct. 2751, 2759 (2014). Mental health
and substance use services are less well articulated in regulations. Many insurers have
specified pharmaceutical formularies or tiers and pediatric oral and vision services. See
generally state health insurance exchange websites: Regulations, CAL. HEALTH BENEFIT
EXCH., http://hbex.coveredca.com/regulations/ (last visited Apr. 15, 2015); Summary of
Benefits and Coverage (SBC), KY. HEALTH BENEFIT EXCH.,
http://healthbenefitexchange.ky.gov/Pages/Summary-of-Benefits-and-Coverage-(SBC).aspx
(last visited Apr. 15, 2015); Rules & Regulations, MASS. HEALTH CONNECTOR,
https://www.mahealthconnector.org/about/policy-center/rules-regulations (last visited Apr.
15, 2015).
111. Essential Health Benefits, HEALTHCARE.GOV, U.S. CTRS. FOR MEDICARE &
MEDICAID SERVS., https://www.healthcare.gov/glossary/essential-health-benefits/ (last
visited Apr. 15, 2015).
