What’s an Essential Health Benefit?

Throughout the ongoing efforts to repeal/replace/revise the Affordable Care Act, a few terms and phrases have been mentioned repeatedly in the debate over what should and shouldn’t be in the new health care legislation.

Since I work in the industry and ALSO am an ACA enrollee (who does not receive a subsidy — a distinction that I know matters to some people), I am uniquely qualified to explain (1) what the various terms and phrases mean in this healthcare debate, and (2) how the ACA works from both a provider and an enrollee standpoint.

So I’ll write a couple of posts with information about what the terms you hear in these ongoing debates mean, and how they impact people’s coverage and care.

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First, let’s talk about Essential Health Benefits. One policy idea that the Republicans keep proposing is to allow insurance companies to sell plans on the exchanges that will exclude “essential health benefits” from coverage.

They want to do this in order to make premiums cheaper for folks buying coverage on the exchanges. But as I will explain, these lower premiums do not come without significant costs.

Prior to the passage of the ACA in 2010, individual health plans had no strict laws about what they needed to cover, or what kinds of copays/deductibles/etc they could charge patients. An insurance company could sell a plan with a $20,000 deductible that covered no hospital services, or a plan that excluded prescription drugs and any office visit charges.

Prior to 2015, I had an individual health insurance plan that excluded maternity care. It was cheaper that way (adding maternity care would have added about $250 a month to my premium, AND I would have had to pay that surcharge for a year before they would have covered any pregnancy of mine).

The policymakers working on the ACA in 2009–10 realized that this was a pretty significant problem (since people were buying plans that didn’t cover much of anything), so they wrote into the law that any insurance company who wanted to sell a plan on the exchanges had to offer plans that covered ten categories of “essential health benefits.” Those categories are:
1. Ambulatory patient services (outpatient treatment)
2. Emergency treatment
3. Hospitalization
4. Maternity and newborn care
5. Mental health and substance abuse treatment
6. Prescription drugs
7. Rehabilitative and habilitative services and devices (PT, OT, etc)
8. Laboratory services 
9. Preventive and wellness services and chronic disease management
10. Pediatric services, particularly dental and vision

Now of course, requiring plans to cover these things makes the plans a little more expensive than (some of) the plans you could buy before the ACA passed. (That’s mainly why you heard a lot of people complaining about “losing their plans and having to pay more” after the ACA went into effect.)

What people may not realize, however, is that those cheap plans that some people had before the ACA passed probably were pretty terrible plans.

Sure, their premium may have only been $100 a month, but if their plan didn’t include emergency treatment or hospitalization, they would have been faced with (at least) tens of thousands of dollars in medical bills if they’d had a heart attack or broken a leg.

People’s health care usage differs, and people may want to buy just a bare-bones insurance plan that hardly covers anything.

But please believe me — an industry insider — when I say that bad luck and bad health can strike any healthy person at any instant. You may be the healthiest person on earth, but nothing stops a tree branch from falling on you when you’re out for a jog. Nothing stops your appendix from bursting if it’s ready to go.

And unless you have tens of thousands of dollars in savings that you can easily put toward medical bills, it works in your best interest to have a good health plan with comprehensive coverage if that bad luck happens to strike.