Millions of Americans who receive their health insurance through their employers are most likely watching the House Republicans’ rush to repeal and replace the Affordable Care Act with the sense that they have little actual stake in the outcome. The changes, after all, only apply to health care plans that are sold on the individual market, and through state health insurance exchanges.
According to Matthew Fiedler, an economic studies fellow at the Brookings Institution’s Center for Health Policy, the American Health Care Act that is expected to be voted on in the House today, could allow employers nationwide to offer plans that don’t cover major categories of health benefits currently required under the ACA. It could also allow them to reinstate lifetime caps on some benefits and eliminate limits on a policyholder’s annual out-of-pocket costs.
The reasons for the change are related to an element of the ACA that never had a real effect on the insurance market under existing law. A provision in the law allows states to determine the “essential benefits” covered under any insurance plan, and allows companies to choose any state-approved package of essential benefits when negotiating the terms of a group insurance package for their employees.
That was effectively rendered moot because the ACA went on to establish a set of federal essential benefits that insurers had to comply with, meaning there were no differences between the states.
The AHCA, however, contains a provision that would allow states to seek waivers of the federal essential benefits requirements, and because the rule allowing companies to choose any state’s set of essential benefits as the basis for the plan they offer to their employees, the minute one state is given permission to jettison some of those benefits, employers would be allowed to adopt the state’s new set of essential benefits for their employees.
Another possible effect could be that employers continue to offer a wide assortment of benefits similar to those currently required, but select a state definition of essential benefits that allows them to remove lifetime coverage caps or annual out-of-pocket expenditure limits on certain kinds of care. That’s because those protections only apply to treatment considered an essential benefit.
Suppose that even one state secured a waiver that allowed it to drop maternity services, mental health services, or prescription drugs from the definition of essential health benefits—a plausible scenario since these services were commonly not covered in individual market plans prior to the ACA and since waivers would be easy to obtain.
In this case, a large employer plan that wanted to impose an annual or lifetime on limit on these services could simply adopt that state’s definition of essential health benefits. Likewise, a large employer plan that did not want to limit enrollees’ out-of-pocket spending with respect to these services could also take this approach. In a more extreme, but still plausible, scenario in which even one state elected to completely eliminate its essential health benefit standards, the requirement to provide these protections would effectively disappear entirely for large employer plans nationwide.
And even if an employer is located in a state that retains the ACA’s definition of essential benefits, its employees would most likely have no recourse to state regulators, whose ability to place requirements on the kind of self-insurance plans adopted by most large employers is strictly limited.
That means that a company located in Massachusetts, for example, could adopt a set of benefits requirements that were drafted and adopted by lawmakers in Texas, and legally use it to shape their employees’ health insurance coverage.
It’s unclear whether this particular effect of the AHCA was something lawmakers who drafted the language allowing essential benefits waivers knew about or if it is simply an unintended consequence.
What is clear is the question this part of the bill’s impact raises: What other effects would this piece of legislation, poorly understood at best by the majority of the public, have on people’s health care. It would be easier to answer that question if House Republican leadership had made the legislative language of the bill available in advance of today’s vote, and had given members of the House time to actually examine the package they are asking them to vote on.