Essential Benefits Are… Essential

Marc Stier |

The ACA repeal effort failed in the House on Thursday. But it will be voted on today.

And the bill keeps getting worse and worse — and that one particular way in which it got worse today may ultimately kill it, even if it passes the House today.

recent report by the Center for Budget and Policy Priorities, points to some of the ways the bill that emerged on Thursday morning deepens cuts to health care:

“The updated version makes additional changes to Medicaid that are even more damaging overall, including giving states the options to: convert their Medicaid programs into block grants; impose onerous work requirements on adult beneficiaries who are not elderly, disabled, or pregnant; and freeze enrollment in the ACA’s Medicaid expansion starting in 2020. These provisions would likely add to the millions of people who would have Medicaid coverage under the ACA but would become uninsured under this legislation.”

I want, however, to focus on one somewhat arcane aspect of the deal that President Trump offered the right wing Republicans today in order to secure their votes for the proposal. Trump offered to repeal the essential benefits requirement for health insurance.

This proposal is, for two reasons, utterly incompatible with a decent health insurance system. And, as I point out at the end of this post, it’s not likely to be acceptable to Senate Republicans, not least because including it in a health care plan considered by the Senate this year would violate Senate rules.

Under the ACA, all health insurance plans must cover ten essential benefits:

• Ambulatory patient services (doctor’s visits)

• Emergency services

• Hospitalization

• Maternity and newborn care

• Mental health and substance abuse disorder services, including behavioral health treatment

• Prescription drugs

• Rehabilitative and habilitative services and devices

• Laboratory services

• Preventive and wellness services, and chronic disease management

• Pediatric services, including oral and vision care

Republicans argue that requiring these benefits in all plans makes them more expensive than they might otherwise be. And that is, in fact, somewhat true. But if one thinks through how health insurance works, it will be obvious that this requirement is essential to good health insurance and absolutely necessary in any health insurance system in which individuals receive a subsidy or tax credit from the federal government to purchase health insurance – which is how both the ACA and the Republican plans are work.

All (Real) health insurance is communal

Health insurance only helps us and is really insurance if we agree to share the costs and risks of illness. So when Republicans complain that the ACA requires people to pay for some benefits they may not use, they are showing that they simply don’t understand what insurance is.

I pay every year for car insurance, including all those years when I don’t have a car accident. My car insurance payments cover the benefits received by others who do have accidents. Does that mean my money is wasted? No, because I’m paying to have some of the money that other people pay for their insurance available to me if I need it. And thus, I am relieved of the worry and stress of the possible costs to me of getting into an accident.

(And yes, what we pay for car insurance varies depending on how likely we are to get into an accident given our driving record, just like what we pay for health insurance varies on whether we smoke. But very little other than smoking—or choosing our parents—determines the likelihood of our getting sick or not.)

So I benefit if I have health insurance even if I don’t use it. And I should pay for that benefit because what other people pay for their insurance will cover my health care bills if I do need care.

Now imagine what would happen if we didn’t require everyone to purchase insurance that provided for these essential benefits.

Insurance companies would offer limited polices that didn’t cover a lot of health care costs. Many people would buy them. Some would do so because they didn’t read the fine print and didn’t recognize how limited the policies were. Others would do so because they aren’t thinking ahead about the risks they are running by buying limited policies – say, policies that don’t cover prescription drugs or mental health care. Some would do so because they can’t afford anything better.

Whatever the reason, the more people who opt out of comprehensive health insurance policies, the more expensive they will become since the only people who always get such insurance are people who are already sick. And as these policies become more expensive, even more people will drop them.

Then, pretty soon, no one will have good, comprehensive insurance because no one will be able to afford it.

And that assumes any health insurance companies actually selll comprehensive individual plans. For most of them won’t want to do so beause they will only be bought by people who are unhealthy. And that’s precisely who insurance companies do not want to insure.

Allowing people to buy inadequate health insurance policies that don’t meet minimal standards isn’t a way of tailoring health insurance to the needs of individuals. It is a way of undermining the very notion of health insurance. There is no such thing as health insurance tailored to individual needs. By its nature, health insurance is a communal good.

When Republicans say they want us to make our own decisions about what health insurance we buy, they show that they don’t understand what health insurance is.

The only way to make sure we all can afford comprehensive health insurance is, first, to make sure we all buy a policy that is comprehensive and, second, to give people who can’t afford such a policy subsidies or tax credits to buy it.

And that’s what the ACA model does. The only alternative to the ACA model that works is single payer, which is another communal form of insurance.

If we provide credits for insurance, we must have an essential benefits requirement

That we provide tax credits under the ACA – and would do so in a much more stingy way under the Republican plan – is another reason we need a list of essential health benefits.

Again, imagine what could happen if we didn’t have those required benefits. A twenty year old who got a $2,000 tax credit for health insurance could buy a policy that costs $2,500 a year that covers only one kind of treatment, medical marijuana. Your tax dollars would insure that this young man stayed perpetually high.

That’s a joke, but it points to a fundamental truth. If we are going to subsidize the costs of health insurance communally – and, as we have seen, there is no alternative – then there has to be some regulations on what we pay for. No one wants our tax dollars used for health insurance that only covers one remedy. (Nor would we want our tax dollars to be used for insurance that only supports many remedies if they are all recommended by quacks.)

Finally, repealing the essential benefits provision make a mockery of the requirement that insurance companies insure people  despite their pre-existing conditions. Even if insurance companies are required to offer everyone the same policy without adjusting the cost based on an individuals health status, the only policies they offer that cover costly medical conditions will be extremely expensive.

So, any real health insurance program can’t get rid of a list of essential benefits that all insurance must meet.

While the far-right Republicans in the House doesn’t understand how insurance works, most Republican Senators do understand it. So I don’t think they would ever vote for a proposal that eliminates the essential benefit requirement. So if an ACA repeal bill ultimately passes the House that eliminates essential benefits, it would run into a Senate road block. If the Senate passed a bill that maintained the essential benefit requirement, an extremely difficult set of negotiations would be required to reconcile the House and Senate bills.

The essential benefits package can’t be removed under reconciliation

But, we are not likely to get to that point, and not only because the House can’t seem to pass an ACA repeal bill and the Senate won’t pass one that takes away the essential benefits requirement. There is a further problem: Republicans can’t legitimately enact a law to remove the essential benefits requirement under the reconciliation procedure they have to use in the Senate to pass the AHCA without any Democratic votes.

To remind you: under normal procedure, an ACA repeal or replacement bill would face a Democratic filibuster and would need 60 votes to be enacted in the Senate. Republicans, however, only have 52 Senators. So they have chosen to try to enact the ACA replacement through a procedure called “reconciliation” that is part of the budget process. Under this procedure, no filibuster is possible and only 51 votes are need to pass legislation. But there is one caveat. Under the Byrd rule, such legislation has to have U.S. budgetary implications.

Changing or removing the essential benefits package would have no such implications and, thus, it can’t be part of legislation enacted through reconciliation.

Republicans are talking about finding a new interpretation of the Byrd rule that would allow them to use reconciliation to remove the essential benefits package. Following this path, however, would be the greatest violation of Senate rules of procedure in the history of that body. It would be, and would be seen by any fair-minded observer of our politics, and certainly by any Democrat, as a despicable act, that contravenes the basic norms of our politics.

Republicans have pushed the limit on observing the rules of our politics, for example, by denying the nomination of Merrick Garland a vote. But violating the Byrd rule would be an unprecedented violation of those rules that would create total warfare between the parties in Congress.

I can’t imagine the Senate majority leader, Mitch McConnell, taking such an action. And I can’t imagine how much more divisive and broken legislative politics would be if he did so.

So, as a matter of politics and policy, the deal Trump offered the right-wing Republicans in the House makes no sense.

The right wingers don’t get the policy. But they get the politics and know that what Trump offered can’t get through the Senate. And that’s one reason the Republicans are stuck today.

(Another is, as I put it, somewhat facetiously on Facebook today, the current bill doesn’t cause enough people to lose their health insurance to satisfy the far right.)