During recent weeks, you have probably heard the term Essential Health Benefits repeatedly as Congress continue efforts to repeal and replace the Affordable Care Act (ACA). Right now, the Senate GOP leadership is cooking up their version of a health care bill behind closed doors and could take a vote before the July 4th recess.
The House-passed GOP plan eliminates Medicaid expansion and dramatically cuts Medicaid funding. Congress is also considering measures to allow states to waive the essential health benefit rules within the ACA. What are “Essential Health Benefits” and why have they become so central in the debate around health insurance coverage in America?
Essential Health Benefits (EHBs), also called federal minimum benefit standards, are at heart of the ACA. EHBs outline a set of ten categories of services that health insurance plans must cover at minimum. States must also provide EHB to beneficiaries eligible under the ACA’s Medicaid expansion, and plans may offer additional benefits such as dental and vision coverage.
Prior to the ACA, it was up to each respective state to determine what benefits (called insurance mandates) had to be included in insurance plans. Not surprisingly, states differed widely in terms comprehensiveness required, and no specific benefit was deemed essential in all 50 states and Washington, D.C.
EHBs provide coverage that offers viable protection against some of the most basic health care costs Americans experience and were designed to provide marketplace consumers with insurance coverage similar to the coverage of employer-sponsored insurance and Medicaid.
So, every health plan must cover the following services1:
- Ambulatory patient services (outpatient care you get without being admitted to a hospital)
- Emergency services
- Hospitalization (like surgery and overnight stays)
- Pregnancy, maternity, and newborn care (both before and after birth)
- Mental health and substance use disorder services, including behavioral health treatment (this includes counseling and psychotherapy)
- Prescription drugs
- Rehabilitative and habilitative services and devices (services and devices to help people with injuries, disabilities, or chronic conditions gain or recover mental and physical skills)
- Laboratory services
- Preventive and wellness services and chronic disease management
- Pediatric services, including oral and vision care (but adult dental and vision coverage aren’t essential health benefits)
- And these two additional benefits:
- Birth control coverage (contraceptive methods and counseling for all women)
- Breastfeeding coverage (breastfeeding equipment and counseling for pregnant and nursing women)
Before the ACA, most health insurance frequently did not cover these basic services. For example, in 2011, among people in the individual market:
- 62 percent had plans that didn’t cover maternity care;
- 34 percent had plans that didn’t cover substance use treatment;
- 18 percent had plans that didn’t cover mental health; and
- 9 percent had plans that didn’t cover prescription drugs.
Under the GOP’s replacement plan, comprehensive insurance, with benefits like maternity or mental-health coverage, could become unaffordable—if not unavailable.
If the Essential Health Benefit standards were eliminated, individual and small-group market plans would quickly revert to the pre-ACA status quo and would likely:
- Leave people who have pre-existing conditions without the coverage they need. People with pre-existing conditions — who need services like substance abuse treatment,mental health services, or comprehensive prescription drug coverage — often wouldn’t be able to find the coverage they need at any price, much less an affordable one.
- Charge women more than men for coverage. In practice, eliminating Essential Health Benefit requirements means that women would once again be charged more than men, since they’d have to pay more for plans with maternity coverage — if they could even find a plan.
- Burden even insured people with unaffordable bills and medical bankruptcies. Before the ACA, millions of people had health insurance that wouldn’t actually cover them if they got sick. Plans often had annual and lifetime limits on coverage and no limits on individuals’ out-of-pocket costs, and they omitted key services.The ACA fixed this by prohibiting annual and lifetime limits and setting an annual limit on what enrollees can be required to pay out-of-pocket for deductibles and other cost-sharing. Eliminating the Essential Health Benefit standards would make these rules meaningless.