The Implications of Eliminating Essential Health Benefits

People who need maternity care, rehabilitative inpatient care, specialty prescription drugs and other fundamental services could be affected if states are permitted to waive an Affordable Care Act (ACA) provision that requires participating insurers to cover 10 essential health benefits.

The Issue

The requirement that these essential benefits be included in ACA-compliant nongroup insurance coverage increases premiums beyond what they would be if people could purchase plans covering fewer benefits. This had made the requirements somewhat controversial and spurred interest in reducing or eliminating them among some insurers and policymakers; some have proposed allowing states to use waivers to reduce or eliminate essential health benefit requirements.

Key Findings

Eliminating or permitting states to waive an ACA provision that requires participating health insurance companies to cover 10 essential health benefits could contribute to thousands of dollars in new out-of-pocket expenses for patients.

• Costs for individuals in need of inpatient care would rise more than $33,000 annually if they were spread only among the pool of people needing inpatient services, for example, instead of those costs being shared among the broader pool of people covered under the ACA’s marketplace nongroup plans.
• Women using maternity care through their ACA marketplace health plan could expect close to a $17,000 increase in overall costs, on average.
  
• Individuals needing specialty drugs for treating diseases like cancer could see premiums rise by more than $14,000 annually if essential health benefits coverage for these drugs is eliminated.

Conclusion

Policymakers seeking to eliminate the ACA’s essential health benefits argue that paying for coverage for services, that some people may not use, unnecessarily raises costs for many. Though annual premiums may fall if essential health benefits coverage is eliminated, people who need these services could face thousands more in direct out of pocket costs as a result, likely leading to significantly higher levels of unmet medical need.

About the Urban Institute

The nonprofit Urban Institute is dedicated to elevating the debate on social and economic policy. For nearly five decades, Urban scholars have conducted research and offered evidence-based solutions that improve lives and strengthen communities across a rapidly urbanizing world. Their objective research helps expand opportunities for all, reduce hardship among the most vulnerable, and strengthen the effectiveness of the public sector. Visit the Urban Institute’s Health Policy Center for more information specific to its staff and its recent research.