The Need for Essential Health Benefits & Community Rating:

A response to a Congressman’s plea for their elimination.

Last week, Congressman Sanford penned a thoughtful explanation as to why the ACA’s repeal and replace efforts fell short in Washington, D.C. In it, he admits that it was rushed and afforded only 17 legislative days for discussion before the intended vote compared to the ACA, which was given well over ten times that length for discussion.

He states that essential health benefits and community ratings, which he deems as “fatal flaws” within our healthcare system, can be eliminated to make health insurance more affordable.

But what are essential health benefits and community ratings? How important are they and at what cost, if any, should we abandon them?

Essential health benefits are just that. They are the benefits which, under the ACA, health insurers are obligated to cover in plans they offer. They include trips to the emergency room, hospitalization, prenatal care and pediatric services, to name a few. Similar to how the minimum wage provides a floor under which employees cannot be paid, the essential health benefits are the ACA’s baseline provisions, which insurers may not undercut when drafting policies.

Healthcare.gov defines community rating as “A rule that prevents health insurers from varying premiums within a geographic area based on age, gender, health status or other factors.” Eliminating community rating sounds like a backdoor way for insurance companies to screen for preexisting conditions. While insurers may not be able to flatly deny a person based upon their health conditions, it is possible — by eliminating community rating — they could price the policy so high that it would have the same effect. Removing community ratings from the healthcare system has the potential to make the ban on preexisting conditions merely illusory.

By eliminating the essential health benefits, the op-ed suggests people will choose their individually tailored insurance policy, a la carte, based on only what they need, thereby realizing a reduction in premiums. In reality, insurance policies are most often not chosen by what they do or do not cover. The truth is half of Americans live paycheck to paycheck. For them, policies are selected by considering only one factor: monthly premiums. The result is people paying cheaper premiums for even cheaper insurance. And when that person discovers that his or her policy does not cover the ambulance ride to the E.R. or the stay in the hospital, medical bills mount and, oftentimes, bankruptcy provides the only escape.

Congressman Sanford and his fellow members of the Freedom Caucus seem to be pushing for the elimination of essential health benefits and community ratings because they believe doing so will cause insurance premiums to fall. This theory is premised on the assumption that insurance companies will be so generous as to pass along their savings directly to their customers by reducing their premiums and deductibles. That may be true. However, at what cost should consumers forfeit essential health benefits and a rule that prevents discrimination?

There are many salient points to take away from the op-ed, mainly the importance of not rushing through legislation that can have such a devastating and terminal impact on Americans. When the suggestion is made that certain portions of our healthcare system should be removed to make policies more affordable, it warrants an explanation as to what, specifically, will be removed, who will be impacted and how.

Reasonable minds would likely agree when he states: “Good insurance is insurance that works for you.” The same minds would most likely also agree that health insurance that fails to cover a hospital stay or which discriminates based on health conditions is neither “good” nor “works.”

-Joe K. Cunningham