It would appear that the deal-making skills of Donald Trump will win the day. Word on the street is that the Freedom Caucus and the president are close to a deal to reinstate a provision that was included in the February leaked draft of the ACHA that deferred to states what would be considered Essential Health Benefits. Not a moment too soon. Voting on the bill is scheduled for today. Freedom Caucus and president meeting at 11:30 to close the deal (or have it fall apart - we are talking about the Freedom Caucus here). We still put chances for passage in the House at 60-40 and rising.
A major sticking point for conservatives has been the high cost of health insurance. They argue, correctly, that the rich, one-size-fits all benefit design mandated by the ACA has driven up premiums on the individual market. The increase in premiums has had a corresponding effect on the cost of subsidies to the U.S. Treasury.
The concerns are actually pretty rational. An analysis by eHealthInsurance in 2013 estimated that health insurance premiums in the individual market would increase 47 percent due to EHBs. The Institute of Medicine which was charged with making recommendations to the Department of Labor and HHS about the EHBs warned that too rich a design would be to the detriment of affordability.
At Senate HELP committee hearings in February, Marilyn Tavenner from the trade group America’s Health Insurance Plans and Julie McPeak, the Tennessee Insurance Commission and president-elect of the National Association of Insurance Commissioners emphasized the need to defer definition of EHBs to the states. Senate Republicans seemed to agree with this conclusion.
The leaked draft of the AHCA would have sunset the essential health benefit requirement in the ACA December 31, 2019. Since the timeline for all provisions of the AHCA have moved up, we would expect this amendment to carry a date of Dec. 31, 2017 or 2018.
As a reminder, the Essential Health Benefits that must be included in every Qualified Health Plan sold on the individual market are:
- Ambulatory patient services
- Emergency services
- Hospitalization
- Maternity and newborn care
- Mental health and substance use disorder services, including behavioral health treatment
- 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
What constitutes the items and services for each these categories was established by the Obama Administration based on what was the largest small group plan in each state in 2014.
Since EHBs are in play, we would also expect the community rating requirement to be in play as well. Trump is reportedly a hard “no” on lifting prohibition on exclusions for pre-existing conditions.
Of course, the rightward turn of the bill means alienating House moderates. The thing about moderates is that they tend to have leadership ambitions and generally are team players. So, we doubt the ACHA is the hill they want to die on so early in the term.
Also, the conventional wisdom is that changes to benefit design – the age band, community rating and EHBs will not survive Senate Rules on extraneous provisions to Reconciliation. In December, we took a close look at that conventional wisdom and what conservative think tanks like The Heritage Foundation (who not coincidentally has opposed the American Health Care Act of 2017) had to say. You can read more about that here.
If you want the reader’s digest condensed version: the SCOTUS decision NFIB v. Burwell regarding the individual mandate forever linked the tax provisions (subsidies and penalties) to the benefit design. From the Supremes:
“Congress made the guaranteed issue and community rating requirements applicable in every State in the Nation, but those requirements only work when combined with the coverage requirement and tax credits.”
The thinking of conservatives is that if changes to the individual mandate and tax penalties and subsidies are ok under the Byrd Rule, then changes to benefit design must also be, given the SCOTUS decision.
Only the Senate Parliamentarian knows how she will call it but I would not bank on the conventional wisdom. It just hasn’t been very accurate lately.
Call with questions. We will be here round the clock until Congress goes home for the weekend.
Emily Evans
Managing Director
Health Policy
