Media reports indicate that President Trump and Congressional Republicans are working to revive their bill to repeal the Affordable Care Act (ACA) with the same harmful provisions plus two new ones. States would be able to opt out of “essential health benefits” and the requirement that health plans not charge people more because they are sick.
This new approach, if adopted, would completely undermine the popular ACA provision ensuring that people with pre-existing conditions can’t be denied coverage. It is meaningless if you are technically offered coverage by an insurer if the plan doesn’t cover your health conditions, or it is sold at an astronomical price that only the wealthiest can afford. This approach will make cheaper, bare-bones coverage available to healthy individuals, but it will prevent people who actually need health care from getting good and affordable coverage.
Essential Health Benefits
“Essential health benefits” are the minimum standards for coverage that must be included in certain types of health insurance – plans sold to small employers and in the “individual market,” – plans sold directly to consumers who do not have job-based coverage. Essential health benefits include basic and necessary categories of care as: hospitalization; maternity and newborn care; mental health and substance use disorder care; prescription drugs; and emergency room services.
If a state opts out of essential health benefit protections, insurers will once again get to pick and choose what to cover. Insurers will drop comprehensive benefit to help attract the healthiest (and cheapest to cover) customers. Benefits that will most likely be cut back are: maternity services; prescription drugs; mental health and substance use disorder services; rehabilitative care; and pediatric dental and vision care. Families who lack coverage for critical services will once again bear the full financial weight for illness and injury, and many will be unable to afford needed health care.
Before essential health benefit protections were in place, coverage in the individual market was much more limited than job-based coverage.
- In Texas before the ACA, there were no policies for sale in the individual market that included maternity services and maternity was not always included in small employer plans. The average charge for pregnancy care and delivery for women with private insurance is more than $32,000 for a vaginal birth and $51,000 for a caesarean section without complications. Few families could absorb these enormous costs if insurance failed to include maternity coverage.
- Mental health coverage also was often excluded, or else very limited. Nationally, before the ACA, 34 percent of individual market consumers did not have coverage for substance abuse services, and 18 percent did not have coverage for mental health services.
- Nationally, before the ACA, one of five people enrolled in the individual market had no prescription drug coverage, compared with just one in twenty in the employer market.
- Coverage of rehabilitative services, particularly important to children who need to learn developmentally appropriate skills was often limited before essential health benefit protections.
One of the most popular and well-known provisions of the ACA is that people with pre-existing conditions can’t be denied health coverage. Mentioned less often, but just as important, is that people with pre-existing conditions also cannot be charged more because they are sick. This is called “community rating” in insurance jargon, and it means that everyone pays the average price regardless of health conditions. If the ACA repeal bill ends community rating, it will resurrect a historic form of discrimination. People with pre-existing conditions will be unable to afford premiums, even if they are technically offered a plan.
Access isn’t the same as coverage. You may technically have access to a Ferrari, but that doesn’t mean you can afford to buy one.
In Texas, we know a bit about how dramatically higher prices can climb without community rating. Before the ACA, small employers technically had to be offered a plan even if they had sick employees, but there were few restrictions on how much groups could be charged. The Texas Department of Insurance collected data on both the average per-person premium charged to small employers and the maximum per-person premium charged to small employers. In 2006, insurers generally reported average per-person premiums of $3,000-$4,000, and maximum per-person premiums of $20,000-$30,000. One insurer reported an average per-person premium of $2,700 and a maximum possible per-person premium of $62,000. Our history in Texas shows clearly that a guaranteed “offer” of coverage with no pricing protections is essentially meaningless.
Return to the bad old days
The state options approach being discussed in Congress is a bad deal for Texans. It will place coverage out-of-reach for those who need it most.