Report: Cutting essential health benefits won't save much money
Cutting essential health benefits (EHBs) that are part of the Affordable Care Act (ACA) won’t reduce premiums much, according to a new Urban Institute report.
EHBs make up less than 10% of total monthly premium dollars. Removing the EHB protections will place costs for that care on individuals, which can make those services unaffordable, the study authors said.
Republicans in both the House and Senate have raised the idea of cutting EHB requirements in recent bills aiming to repeal and replace the ACA..
The report suggests that opponents of the ACA are choosing the wrong area to make cuts when they propose eliminating EHBs, which require coverage for areas like preventive care and women's health.
The Urban Institute said maternity and newborn care account for 6% of premium costs, rehabilitative care makes up 2% and pediatric dental and vision care totals 1%. The large premium cost drivers are office-based care (30%), prescription drugs (22%), outpatient facility care (17%) and inpatient care (15%).
The 10 services covered by EHBs are ambulatory patient services, hospitalization, maternity and newborn care, rehabilitative care, pediatric services, mental health and substance use disorder services and prescription services.
The Urban Institute report comes on the heels of the Senate’s Better Care Reconciliation Act (BCRA). The BCRA, as well as the House’s approved American Health Care Act, would allow states to avoid the EHBs if they are approved for a waiver. This would allow insurers to eliminate annual and lifetime coverage caps and not cover maternity and high-cost drugs. Instead, individuals would have to pay for that care out of pocket.
The Urban Institute isn't the only one warning about cutting EHBs. The Brookings Institution reported in May that allowing states to define EHBs would “weaken ACA protections against catastrophic costs for people with employer coverage nationwide.”
The future of EHBs is uncertain. President Donald Trump and Sen. Ted Cruz (R-Texas) have said Congress should repeal the ACA and create another plan later. In that case, EHBs would disappear. Meanwhile, Senate leadership doesn't currently have enough support to approve the current BCRA, but Senate Majority Leader Mitch McConnell has postponed Congress' summer break to give him more time to make a deal.
If the GOP is unsuccessful in ACA repeal, EHBs would live to see another day, but could still be a target for future Republican healthcare efforts. The Urban Institute suggests that if Republicans are looking for ways to cut premiums, eliminating EHBs won’t save much money and could put Americans back to the pre-ACA days, when a pricey diagnosis could bankrupt them.
- Robert Wood Johnson Foundation The Implications of Cutting Essential Health Benefits
- Healthcare Dive Senate looking at Plan B if BCRA fails
- The Brookings Institution Allowing states to define “essential health benefits” could weaken ACA protections against catastrophic costs for people with employer coverage nationwide