NEWS

Will Relaxing Mandatory Health Benefits Lower Premiums?

April 21, 2017

By Julie Rovner, Kaiser Health News

As House Republicans try to find common cause on a bill to repeal and replace the Affordable Care Act, they may be ready to let states make the ultimate decision about whether to keep a key consumer provision in the federal health law that conservatives say is raising insurance costs.

Those conservatives, known as the House Freedom Caucus, and members of a more moderate group of House Republicans, the Tuesday Group, are hammering out changes to the GOP bill that was pulled unceremoniously by party leaders last month when they couldn’t get enough votes to pass it. At the heart of those changes reportedly is the law’s requirement for most insurance plans to offer 10 specific categories of “essential health benefits.” Those include hospital care, doctor and outpatient visits and prescription drug coverage, along with things like maternity care, mental health and preventive care services.

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The Freedom Caucus had been pushing for those benefits to be removed, arguing that coverage guarantees were driving up premium prices.

“We ultimately will be judged by only one factor: if insurance premiums come down,” Freedom Caucus Chairman Rep. Mark Meadows (R-N.C.) told The Heritage Foundation’s Daily Signal.

But moderates, bolstered by complaints from patients groups and consumer activists, fought back. And a brief synopsis leaked from the intraparty negotiations suggests that the compromise could be letting states decide whether to seek a federal waiver to change the essential health benefits.

“The insurance mandates are a primary driver of [premium] spikes,” wrote Meadows and Sen. Ted Cruz (R-Texas) in an op-ed in March.

But do those benefits drive increases in premiums? And would eliminating the requirement really bring premiums down? Health analysts and economists say probably not — at least not in the way conservatives are hoping.

“I don’t know what they’re thinking they’re going to pull out of this pie,” said Rebekah Bayram, a principal consulting actuary at the benefits consulting firm Milliman. She is the lead author of a recent study on the cost of various health benefits.

Opponents of the required benefits point to coverage for maternity care and mental health and substance abuse treatment as driving up premiums for people who will never use such services.

But Bayram said eliminating those wouldn’t have much of an impact. Hospital care, doctor visits and prescription drugs “are the three big ones,” she said. “Unless they were talking about ditching those, the other ones only have a marginal impact.”

John Bertko, an actuary who worked in the Obama administration and served on the board of Massachusetts’ health exchange, agreed: “You would either have very crappy benefits without drugs or physicians or hospitalization, or you would have roughly the same costs.”

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