How the GOP health-care bill could harm everyone with employer-based insurance

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last updated 3 May 2017

Republican leaders have been trying to reassure the critical number of House Republicans worried that the current health-care bill would "torpedo" protections for people with pre-existing conditions, as Rep. Fred Upton (R-Mich.) put it on Tuesday, in part by insisting that very few states would actually use the allowed waivers to scrap "essential health benefits" or rules preventing insurers from charging more due to pre-existing conditions. But to paraphrase President Trump, health care is complicated, and even one state messing with the essential benefits guaranteed under the Affordable Care Act could affect health insurance nationwide, says health economist Matthew Fielder at the Brookings Institution.

"In particular, a single state's decision to weaken or eliminate its essential health benefit standards could weaken or effectively eliminate the ACA's guarantee of protection against catastrophic costs for people with coverage through large employer plans in every state," he writes. ObamaCare bans limits on annual and lifetime health expenditures and requires insurance plans to cap out-of-pocket costs, but only for the defined essential health benefits. If these benefits are eliminated partially or completely, Fielder says, so are the cost protections for those benefits.

Most Americans have health coverage through work, and roughly 115 million of them through large employer plans, Fielder writes. These plans typically "cover individuals working in multiple states," and "current regulations and guidance permit large employer plans to apply any state's definition of essential health benefits for the purposes of determining the scope of the ban on annual and lifetime limits and the requirement to cap out-of-pocket spending." He continues:

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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. ... 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. [Fielder, Brookings Institution]

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Peter has worked as a news and culture writer and editor at The Week since the site's launch in 2008. He covers politics, world affairs, religion and cultural currents. His journalism career began as a copy editor at a financial newswire and has included editorial positions at The New York Times Magazine, Facts on File, and Oregon State University.