Benefits targeted by ACA repeal bills aren’t biggest drivers of cost

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 - Linda Blumberg, PhD
Linda Blumberg, PhD

States would be able to waive requirements for insurers to cover the Affordable Care Act (ACA)’s “essential health benefits” (EHBs) under Republican plans to replace the law. The benefits most likely to be waived, however, make up small shares of premiums compared to other costs, according to an analysis from Urban Institute fellows Linda Blumberg, PhD, and John Holahan, PhD.

The ACA required health plans in the individual and small group markets to cover 10 benefits:

  1. Ambulatory patient services.
  2. Emergency services.
  3. Hospitalization.
  4. Maternity and newborn care.
  5. Mental health and substance use disorder services including behavioral health treatment.
  6. Prescription drugs.
  7. Rehabilitative and habilitative services and devices.
  8. Laboratory services.
  9. Preventive and wellness services and chronic disease management.
  10. Pediatric services, including oral and vision care.

A previous study from the Kaiser Family Foundation found few pre-ACA individual market plans left out hospitalization, outpatient care or prescription drugs. Those categories make up some of the largest shares of premium costs under ACA-compliant plans, with office-based care, like primary and preventive care, making up the largest share at 30 percent. They’re unlikely to be waived by insurers, the analysis suggested, because “coverage for these services is generally seen as fundamental to insurance.”

The benefits more likely to be axed by insurers if given the choice make up smaller shares of premiums. Maternity care would be the most likely benefit to be waived. According to the analysis, about 6 percent of monthly premium dollars could be attributed to that benefit. Rehabilitative and habilitative care accounted for 2 percent of total premium dollars, and pediatric dental and vision care for 1 percent.

Any saving customers gain from lower premiums is far outweighed by the costs of those services if they’re forced to cover it all themselves. For example, maternity care benefits accounted for about $278 of an annual premium of a silver-level ACA plan. Outside of an insurance plan, however, a patient would have to pay an average of $13,888 if they needed that care. Rehabilitative care adds $96 to the premium, but would cost a customer $4,251 if financed separately.

The per-person costs of insuring essential benefits are reasonably low when the costs are spread broadly across a large population with diverse health care risks,” Blumberg and Holahan wrote. “But placing those costs fully on the users of care can make those services unaffordable for those who need them.”

Waiving benefits, however, has maintained support among conservative Republicans. Sen. Ted Cruz, R-Texas, has proposed allowing insurers to sell plans which aren’t ACA-compliant as long as they also offer an ACA-compliant plan in the same state. The amendment is now being analyzed by the Congressional Budget Office.