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What Are ‘Essential Benefits’ in GOP Health Care Bill Debate?

This week marks the seventh anniversary of the Affordable Care Act and Republican leaders in the House of Representatives are taking another day to try to push through their proposed replacement, the American Health Care Act.

Some conservatives reject the AHCA as “Obamacare Lite.” So one proposal is the removal of Obamacare’s “10 Essential Benefits” — the list of things that all health insurance policies taking part in the Obamacare marketplaces must cover. Instead, states could decide what counts as "essential".

Image: Daniela Chavarriaga holds her daughter as a pediatrician administers a measles vaccination
Obamacare's 10 essential health benefits cover basic services such as vaccines and pediatric visits Joe Raedle / Getty Images, file

Here’s a rundown of what they are:

  • Outpatient care — This covers most scheduled doctor visits, such as to check a rash, or a non-emergency stomach ache. Insurance companies negotiate deals for these and often designate "networks" of doctors and clinics with approved charges. Individuals who walk in without coverage pay much, much more.
  • Emergency room trips — Insurance policies cover both the ER visit and ambulance trips. Otherwise people can get socked with bills totaling tens of thousands of dollars, perhaps incurred while they were unconscious.
  • In-hospital care — All care people get as hospital patients, such as surgery. Some conservatives argue that people should be able to choose to opt out of this type of coverage and pay lower premiums. Most health policy experts say this is a gamble. “One answer is because someday you may be sick and that’s the way that insurance works,” says David Cutler, a Harvard University economics professor who helped design the Affordable Care Act.
  • Pregnancy, maternity and newborn care — This one’s controversial to some, who ask why men should pay for a service they’ll never use. “It is true that women get pregnant but men kind of help them get pregnant,” Cutler said. Pre-ACA, 62 percent of people with non-group policies had no maternity benefit.
  • Mental health and substance abuse disorder services — This particular benefit has gotten some attention with the ongoing opioid epidemic. Before the ACA, 18 percent of non-group policies left off mental health benefits.
  • Prescription drugs — Insurance companies usually negotiate discounts. Out of pocket costs for many drugs can be much higher than what an insurer pays for them.
  • Rehabilitative services and habilitative services. These include help recovering from an injury or illness, but also treatment for kids with autism or cerebral palsy.
  • Lab tests
  • Preventive services — This includes vaccines, cancer screenings such as mammograms and colonoscopies and, controversially, coverage of birth control.
  • Pediatric services — Including dental and vision care for children.

Most Americans get their health insurance through an employer, and most employer-sponsored plans offer most of these benefits as a matter of course. Fewer than 10 percent of Americans buy health insurance on the individual market and that’s the market covered by the ACA’s essential benefits.

Pre-Obamacare, insurance companies could offer very cheap policies that either did not cover many conditions, or that charged a very high deductible or co-pay for such claims.

Advocates for keeping in the essential health benefits clause say it’s the only way to make health insurance manageable and fair.

“Health insurance is confusing enough as is,” writes Jeanne Lambrew, who worked on health reform under Obama and who is now at the Century Foundation.

“Rolling back benefit standards and allowing insurers to make coverage decisions would add to that confusion. And it would put millions of Americans at risk for having a health insurance card but remaining under-insured.”

House Speaker Paul Ryan said it's about choice and lowering costs. "Instead of imposing arrogant and paternalistic mandates, it would increase choice and competition, creating a vibrant market where every American will have access to quality, affordable coverage," he wrote in the Wall Street Journal Thursday.

There’s another stumbling block to removing the essential benefits. The vote on the AHCA comes under congressional rules that say any bill must affect the budget. So any changes to the essential benefits requirements will have to lower federal spending somehow.

But the Congressional Budget Office says the removal of the essential benefits would save less money than keeping them.

Larry Levitt of the nonpartisan Kaiser Family Foundation agrees it's no cost saver. "It's almost certainly the case that repealing benefit requirements would raise the cost of the AHCA since more people would use tax credits," he tweeted.