Today’s Managing Health Care Costs Number is 10
It would be loopy to eliminate essential benefits
There’s been a lot of talk about “essential benefits” in the Affordable Care Act. These benefits are required of all health plans - not just those health plans in the Obamacare exchanges. Mandated benefits are a double-edged sword. They make sure that certain services are covered, and that people are not duped into buying health plans that would provide them with little coverage if they get sick. They mandate coverage for preventive services that otherwise might be underused. BUT mandates make premiums more expensive. First dollar coverage of certain essential services decreases consumer price sensitivity, and mandated coverage likely means that deductibles and cost sharing for other services goes up.
The essential health benefits mandated by the ACA are:
- Outpatient care (like doctor’s office visits)
- Emergency room visits
- Inpatient care
- Maternity and newborn care
- Mental health and substance abuse care
- Prescription drugs
- Rehabilitation services
- Laboratory services
- Preventive services
- Pediatric services
These are not especially controversial - no one thinks that a health plan that excludes emergency room services is “real” health insurance. Before the Affordable Care Act, 2/3 of health plans sold on the individual markets excluded maternity care. That allowed those not expecting to have a baby to pay lower rates -but it made coverage that included maternity care prohibitively expensive.
The essential benefits are actually an important effort to decrease risk selection. Since all health plans must cover these essential benefits - no health plans will suffer from recruiting patients who are “shopping” for services they know they will need. Eliminating the essential benefits would allow health plans to “innovate” in health plan design, but it’s likely that most innovation would be seeking positive risk selection.
Many states have mandates for health plans to cover what they judge to be essential services -but the Employee Retirement and Income Security Act (ERISA, 1973) exempts employer-sponsored self-insured plans from these state mandates. The Affordable Care Act was an important national effort to be sure that Americans had access to meaningful coverage and health plans were not using plan design to attract positive risk.
Some object to the requirement that health plans cover birth control, as it is an essential preventive service for women. Note that birth control is one of the few medical services that is cost saving, so that eliminating this requirement would make health plans more expensive. Further, long acting reversible contraception has helped dramatically decrease the abortion rate in the US. Still, many object to this requirement. I suspect few of those objecting are women of childbearing age.
The ACA allows reasonable cost sharing for non-preventive services, and allows health plans to limit coverage for essential services to in-plan providers. If i had my druthers I’d do away with the cost -free “annual wellness exam,” which is wasteful. And I might allow some cost sharing for preventive services - but these are minor quibbles.
But essential services should be covered by all health plans, and eliminating these coverage requirements would be bad public policy.
EmoticonEmoticon