Conservatives’ Goal to Kill Coverage Guarantees Is Unlikely to Lower Premiums, Report Says

Freedom Caucus rejects “essential health benefits”

As House Republicans try to reach agreement on a bill to overhaul the Patient Protection and Affordable Care Act (PPACA), they may be ready to let states make the ultimate decision about whether to keep a key consumer provision in the act that conservatives say is raising insurance costs, according to a report from Kaiser Health News (KHN).

Members of the conservative Freedom Caucus and the more-moderate Tuesday Group are hammering out changes to the GOP bill that was pulled by party leaders last month when they couldn’t get enough votes to pass it. At the heart of those changes is the PPACA’s requirement for most insurance plans to offer 10 specific categories of “essential health benefits.” Those benefits include hospital, maternity, and mental-health care; doctor and outpatient visits; preventive-care services; and prescription drug coverage.

The Freedom Caucus has insisted that those benefits be removed from the new bill, arguing that coverage guarantees were driving up the cost of premiums. Moderates responded by offering a compromise that would let states decide whether to obtain a federal waiver to change or eliminate the essential health benefits.

But do those benefits really drive increases in premiums? And would eliminating the requirement bring premiums down? Health analysts and economists say probably not, according to the KHN article.

Those who want to get rid of the required benefits point to the fact that premiums in the individual markets jumped dramatically from 2013 to 2014, the first year that the benefits were required.

But Rebekah Bayram, a principal consulting actuary at the benefits consulting firm Milliman, noted that most of that jump wasn’t due to the broader benefits, but to the fact that, for the first time, sicker patients were allowed to buy coverage. “The premiums would go down a lot if only very healthy people were covered and people who were higher risk were pulled out of the risk pool,” she said.

Some conservatives want to change that requirement, too, and let insurers charge very sick people higher premiums.

Another complication, Bayram said, is that the required benefits do double duty. They not only ensure that consumers have a comprehensive package of benefits but enable other parts of the PPACA to work by ensuring that everyone’s benefits are comparable.

For example, the PPACA adjusts payments to insurers to help compensate plans that enroll sicker-than-average patients. But in order to do that “risk adjustment,” Bayram said, “all of the plans have to agree on some kind of package. So if you think of essential health benefits as an agreed-upon benchmark, I don’t know how they [conservatives] can get rid of that and still have risk adjustment.”

Source: Kaiser Health News; April 21, 2017.