If Your Premiums Go Down but Coverage Gets Worse, Does Your Healthcare Matter?

Picture this. Amy becomes pregnant while working as a high school teacher. Her employer’s health insurance plan pays the maternity bills and she happily raises her twins.

Fast-forward a few years. She’s decided to become an entrepreneur and runs a small business. She becomes pregnant again but, this time, finds that her $400 a month individual health insurance policy won’t cover the expenses. In fine print, she discovers that she needed to purchase a special rider to activate maternity care benefits. She’ll have to pay $10,000+ out of pocket now, putting her burgeoning business at risk.

Angry at this, Amy decides to switch insurers but, to her dismay, she finds that the four largest insurers in her area don’t cover most expenses associated with a normal delivery. Amy has nowhere to go. Also, since pregnancy is a pre-existing condition, Amy is advised by her doctor to “not become pregnant again” if she wants to get quote reasonable health insurance rates during her search.

This is not an exaggerated or dystopian situation, it’s a real example from 2010.

It highlights the Russian roulette-style approach to healthcare coverage which existed prior to the introduction of Essential Health Benefits (EHBs) mandated by the Affordable Care Act (ACA).

Contrary to many hyperbolic, and tacky, bill titles in Washington like “The Reducing Barack Obama’s Unsustainable Deficit Act” or the “Big Oil Welfare Repeal Act”, EHB is a relatively subdued term describing what many Americans would consider to be crucial in a healthcare plan.  The ACA’s EHBs ensure that all Marketplace plans and coverage via the ACA’s Medicaid expansion includes the following services:

  • Ambulatory patient services
  • Emergency services
  • Hospitalization
  • Pregnancy, maternity, and newborn care
  • Mental health and substance use disorder services
  • 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
  • It also ensures that key benefits for women including birth control and breastfeeding are included.

With the proposed elimination of EHBs in Medicaid in their draft healthcare bill, Senate Republicans have joined their House counterparts in creating a likely “tree falling in the woods” philosophical conundrum – if health coverage covers little, do low premiums actually mean anything?

Cost vs. Quality

The establishment of EHBs represents not only a signature achievement of the ACA but it offers a window into the entire philosophical debate currently raging regarding what health care coverage should mean in the United States. Namely, what is more important – cutting costs for individuals or promoting the proliferation of quality services?

By bundling EHB services, healthcare premiums generally do go up in the aggregate.  A recent Milliman actuarial study took the example of mandated coverage for prenatal/delivery benefits and found that there would be an across-the-board increase of $8 to $14 in health insurance premiums in a single risk pool.  EHBs are partially why the general trend has been that premiums and deductibles have been going up for many American families.

Yet, it is also true that Americans get much more for their premiums and deductibles.  EHBs represent a significant and robust floor for the breadth and quality of services that Americans can expect with their health insurance.  Healthcare consumers also get a measure of predictability in what and how much their coverage plans will cover and bans on annual and lifetime limits on EHBs further help prevent the most catastrophic economic outcome – medical debt leading to personal bankruptcy filings.  After all, as Lois Lupica of the University of Maine School of Law notes, “[i]f you’re uninsured or underinsured, you can run up a huge debt in a short period of time.

House vs. Senate Republicans

The rhetoric of House Republicans suggests that their primary motivation rests in lowering premiums and their plan of slashing EHBs for all – outlined by s. 121(c) of H.R. 1275 (hyperbolically titled “World’s Greatest Healthcare Plan of 2017”) – would likely do that. But it would do so by returning to a system where many insurance plans are “skimpy” and leave Americans on the hook for services not covered. Certain services would also become more expensive simply due to the contraction of pools from which to distribute costs. The segmenting of pools means that certain groups could simply choose not to help pay for services affecting other groups – such as men opting out of plans that cover maternity care.

Eliminating EHBs would have knock-on effects for everyone. Millions of Americans could suddenly find that their individual or small group plans no longer cover critical services such as prescription drugs or emergency room visits. Even Americans working for larger employers wouldn’t be immune from pressures as employers could once again cap reimbursements for current EHB services.

Based on their respective draft bills, Senate Republicans seem to have a better handle on the problems that this might cause – which is why they left the potential ability to weaken EHB definitions and protections to the states.  Having a blanket provision explicitly repealing EHB federally would likely adversely impact many, many groups of Americans and, to quote the President, be unnecessarily mean.  This is likely why Senate Republicans have chosen to restrict the explicit rollback of EHBs to those on Medicaid (per s. 126(b)) as they realize that low premiums may mean that Americans have difficulty accessing a decent range of services for their premiums – and they don’t want to be blamed for it.

Impact on the Poor

But where both House and Senate Republicans seem to agree is that the poor accessing Medicaid do not and should not have a right to quality coverage. Senate Republicans may have been slightly more parsimonious when it came time to repeal EHBs but their “Sunset” of required EHBs in Medicaid plans represents a public and cutthroat view of healthcare – that it is a privilege only for those capable of paying.

Ultimately, this is a value judgment – albeit an unforgiving one that may be out of touch with Americans based on recent polling.  It may also lead to self-defeating spirals as poverty already may have negative, and socially expensive, long-term health impacts.  With EHBs cut, access to a range of preventive, pediatric and managed care services critical to the welfare of lower-income Americans is jeopardized.

In light of such potential outcomes, Senate Republicans should recognize they will have difficulty in selling their healthcare bill as a pragmatic and principled plan – especially as long as “new entitlements” in the form of stabilization funding or repeals on taxes for already highly profitable (and unfairly legally protected)  pharmaceutical and medical device companies continue to be pushed.

With income inequality already a hot button issue, Senate Republicans should be aware of the droves of American voters who find such handouts distasteful.  If they survive in the final bill even as EHBs in Medicaid are clawed back, Republicans may find that distaste with their values and priorities to be a political – and generational – problem.  After all, 2020 looms as the first general election where Millenials will outnumber Baby Boomers.

Jason Chung is currently senior researcher and attorney at NYU SPS Sports and Society, in New York. He tweets at @ChungSports.



5 replies »

  1. But states can already experiment through 1332 waivers. Hawaii just got one by working with the feds to prove that their plan was workable and had protections for vulnerable populations.

    All the rollback of EHBs does is hurt those in Medicaid expansion immediately and allow states to perform rollbacks unilaterally without having to answer questions about impacts on low-income and vulnerable populations. It’s a blank check which could be abused by bad state politicians and I don’t find that prospect very entertaining, personally.

  2. I will disagree with you a bit here. One of the advantages of having states, and heaven knows the way we do things with states creates tons of work and frustration for me, is having the ability to experiment. If states want to experiment with what should be included in health care coverage I am mostly OK with that. I would hope that you are familiar with the state mandates that existed before the ACA. My best guess is that we just revert to those on the state level, and in most cases those mandates were pretty generous, i.e. the special interest groups are good at what they do. Besides, if I ma wrong, there has got to be some entertainment value in watching the pro-life states refuse to make maternity coverage mandatory.


  3. Guilty as charged. Just know that moving to Canada isn’t an option if Americans get healthcare wrong. :/

  4. “In fine print, she discovers that she needed to purchase a special rider to activate maternity care benefits.”

    That is not a reason to opt for socialized medicine with little choice. Health care contracts should be interpreted favoring the patient, transparency and simplicity. If that train of thought were followed the insurer would have to pay the $10,000. Additionally the hospital delivery costs around $3,000 – $4,000 so some of the remaining costs are likely paid by insurance (Hard to trust one whose figures are blown out of proportion, something that may or may not be true in this case.) Using your figures of “unaffordable” $10,000 charges, apparently you haven’t considered the cost to feed, clothe and educate a child. That dwarf’s the $4,000 or even the $10,000 so I find a lot of problems with the logic you point to.

    Then you complain that she now has a pre-existing condition. Why should anyone be responsible for delivery costs and the mothers costs over the year to raise her child? It sounds like you would permit everyone to buy fire insurance after the house burned down.

    If you believe ” EHB is a relatively subdued term describing what many Americans would consider to be crucial in a healthcare plan.” then why not advocate for a universal contract where any and all changes had to be pre approved by the buyer with explanation? Are you one of those that wish to tell everyone what to do? I agree that such a plan can make the contract transparent to the buyer while permitting the buyer choice.

    I won’t comment on the rest of the discussion, but one thing is sure. The ACA has failed and things are getting worse and worse for the American people. I don’t know that I will like the replacement bill, but I hope after one is passed to stabilize the market for health insurance destroyed by ideologues that new regulations and new laws will be passed to rid ourselves of the overly complicated system the left has devised. I’m not in love with the Republicans so I say this knowing even a better bill than the ACA will not be to my liking.