The House of Representatives passed a measure to fully repeal Obamacare, but the negative effects of the law will continue to unravel until the legislation makes it to the President’s desk. These include the requirement under the new law that the Department of Health and Human Services (HHS) define “essential health benefits,” which must be included in all plans sold in the new health exchanges beginning in 2014. The process began last week.
The legislation outlines general categories to guide the Administration, which is otherwise given unlimited authority to further define the vague guidelines and include others as HHS sees fit.
This expansion of central authority presents several problems. First, the uniformity sought by the authors of Obamacare will be next to impossible for Administration officials to achieve. In determining the essential health benefits, they can take one of two approaches, as health policy expert John Hoff writes in recent Heritage research. The first would be to keep it general, defining required benefits as those that fall under the categories listed, as well as any other categories that HHS includes. This route would provide little useful information about what insurers must actually cover.
The second approach, Hoff writes, would be to list specific services that must be covered. This, however, “starts down a road of infinite complexity and overwhelming detail. If, for example, diagnostic services are included, will the definition list MRI scans as a required diagnostic procedure? Even if it does, the definition would be meaningless unless it goes on to specify under which conditions an MRI must be covered. Which symptoms require an MRI scan rather than a less-expensive x-ray? How long must the patient have experienced the symptoms? Similarly, with respect to hospitalizations—for which conditions and under what circumstances would insurers be required to provide coverage? When it comes to cancer patients, are all chemotherapies included as part of the “essential health benefits”? Are only some included? It is impossible for HHS to define the circumstances for each and every treatment.”
In reality, no central authority can determine what care must be provided and when for every patient. Furthermore, requiring all exchange plans to offer the “essential health benefits” will diminish the consumer’s ability to choose a plan that works best for them. Experts on both sides of the aisle agree that general guidelines would be the better approach for consumers. According to David Schwartz, health counsel for the Senate Finance Democrats, “Too many specifics won’t provide enough flexibility in the market.”
Moreover, plans are likely to become unaffordable as a result of federally mandated benefits. First, Obamacare directs HHS to ensure that the “essential health benefits package” is “equal to the scope of benefits provided under a typical employer plan.” Of course, there is no way to define, in objective terms, a “typical” plan. The Administration could determine that the most comprehensive plans, offered by large, unionized industries, are the most “typical.” This would require individuals and small businesses to purchase generous packages that would likely be unaffordable.
Then there’s the fact that the act of mandating benefits alone will bring advocacy groups out of the woodworks to lobby for particular items and services, leading to arbitrary and unnecessary inclusion of certain benefits. Benefit mandates at the state level have shown this effect. In its annual report, the Council for Affordable Health Insurance observed, “Mandating benefits is like saying to someone in the market for a new car, if you can’t afford a Cadillac loaded with options, you have to walk.” Existing state-mandated benefits include things like acupuncture, hair prosthesis, massage therapy, and other services that are unnecessary for most patients. Nevertheless, once mandated, all covered individuals must pay for these.
Defining what kind of coverage Americans must have is just one way the Administration will have unchecked power to determine the direction of health care reform under Obamacare. To read more, click here.
