Before the House Republican bill to replace the Affordable Care Act died Friday, insurers and regulators were fretting about a major, last-minute change in the House Republican healthcare reform bill requiring states to determine what benefits must be offered in fully insured health plans.
If the amended version of the American Health Care Act became law, the Affordable Care Act's federal benefit requirements would be replaced by a new provision requiring states to set benefit levels for plans starting in 2018. But President Donald Trump and House Speaker Paul Ryan decided to pull the bill Friday afternoon when they failed to win enough GOP support to pass it.
The federal benefit requirement provision was pushed by ultra-conservatives in the House Freedom Caucus, who argued that ditching the federal benefit mandates would allow insurers to sell plans with cheaper premiums.
It was highly uncertain whether Senate Republicans would accept the elimination of the benefit rules. It was also unclear whether that change could be passed under Senate rules for expedited budget reconciliation legislation, which require that all provisions must primarily be about the budget.
But conservative Republicans remain strongly interested in changing the ACA's minimum essential benefits requirement. Experts expect HHS Secretary Tom Price to try to pare down those mandates through rule-making. He may be able to redefine the scope of the 10 categories of benefits specified by the law, or give state insurance regulators greater flexibility in interpreting them.
“They don't have unlimited authority to repeal the essential health benefits, but certainly have authority to define them differently,” said Larry Levitt, senior vice president at the Kaiser Family Foundation.
“They could make mental health benefits bare-bones without Congress if they were feeling particularly mean,” said John Gorman, head of the Gorman Health Group.
Insurers have complained that the huge uncertainty caused by the GOP effort to repeal and replace the ACA has made it difficult or impossible for them to make plan and rate decisions for 2018. Some say they're weighing whether to withdraw from the individual market. And that was before House Republicans and the White House last week unveiled their proposal to erase the ACA's minimum essential benefit requirements.
“This is adding even more uncertainty to an already-uncertain situation, making it unlikely insurers would continue to participate,” said Cynthia Cox, associate director of health reform and private insurance for the Kaiser Family Foundation.
Insurers around the country must decide on their plan offerings and rates for the 2018 individual market within the next two to three months. It would be nearly impossible for state insurance regulators to quickly establish new benefit rules, a process that normally is heavily lobbied and highly contentious.
"Our filing has to be into Pennsylvania the first week of May,” said Chris Fanning, chief marketing officer and head of benefit design at Geisinger Health Plan. “This leaves a very, very short window to do any analysis and determine which essential health benefits we'd want to cover and which we'd want to remove.”
Tom Miller, a conservative health policy expert at the American Enterprise Institute, agreed it's too short a time window for insurers to put together new benefit packages, let alone price them. If the House bill is somehow revived, including repeal of the federal benefits mandate, he predicted states would muddle through 2018 using current benefit standards and consider new rules for 2019.
The House amendment said each state shall define the essential health benefits for plans that consumers can buy with the bill's age-based premium tax credits. Given how fast the amendment was cobbled together, there were major ambiguities in the provision, such as whether it continues the ACA's 10 required categories of benefits, including maternity care, mental healthcare and prescription drugs.
Nicholas Bagley, a law professor at University of Michigan, wrote that the provision could be subject to legal challenges on the grounds that it would coerce states to take action or risk losing significant federal funding.
There also were concerns that eliminating the federal benefit rules or delegating benefit determinations to the states could drive up premiums for people with chronic conditions. Experts say that if the federal definition of essential benefits were eliminated, that would allow insurers to design benefit packages that attract healthier enrollees and deter sicker ones by excluding coverage for behavioral care, addiction services or habilitative care, pricing them out of insurance.
“Removing coverage levels for certain conditions or services in theory reduces the cost of a policy,” Fanning said. “But for those who do purchase those services, it could be even more expensive than it is today, because fewer people would be participating to defray that cost. They wouldn't be affordable for members who need those services.”
In addition, removing the essential benefits requirement would essentially neuter the ACA's ban on insurers setting annual and lifetime caps on benefits, since they could set limits on services that are not required benefits. Removing the basic benefits mandate also would make it harder for consumers to shop and compare plans.
Miller said the last-minute inclusion of the benefits provision illustrates the danger of overly hasty moves to legislate in complex areas of health policy. “This is an illusion of the House Freedom Caucus members, who think you can turn things around on a dime,” he said.
Shelby Livingston contributed to this article.