Essential Health Benefits Will Cost More Than Bare Bones Insurance Plans…And That’s A Good Thing

Last night, the Institute of Medicine (IOM) released its recommendations to the Department of Health and Human Services for defining essential health benefits — the standard benefits insurers will have to offer beginning in 2014. As Sarah Kliff explains, the institute had to balance “affordability against comprehensiveness,” find a way to please patient advocacy groups who “want to ensure that the benefit package is comprehensive, providing robust coverage for a wide array of medical conditions,” and industry groups who “worry that a sweeping benefit package could prove unaffordable.” Ultimately, IOM didn’t provide HHS with specifics, but offered a framework that erred on the side of affordability: it recommended that HHS model the package on the more modest benefits offered by small businesses to ensure that everyone can access the basic plan and that the central purpose of the Affordable Care Act is realized.

But Republicans — who have offered to deregulate the insurance industry almost entirely — are already speaking out against the recommendation. Sen. Mike Enzi (R-WY) offered this condemnation:

Small businesses can’t sustain these increases, especially when combined with the increases that will inevitably result from the more expensive essential health benefits packages mandated by the new law,” said Senator Enzi. “Employers need flexibility when determining what type of health insurance to provide their employees, so they can afford to continue offering coverage. Too many small businesses are already running the numbers and deciding they can’t afford to make payroll and pay for health care. The number of small businesses offering coverage decreased 11 percent this year, and rigid benefit packages will make this even worse.” […]

“It is simple math that as more mandated benefits are included, the higher the costs will be,” Senator Enzi said. “As more regulations are published and more requirements are enacted, premiums will continue to increase which will likely lead to more small employers dropping coverage.

The purpose of the essential benefit rules, however, isn’t to burden businesses or individuals with new costs or unnecessary and unproven benefits, but to establish a floor of basic coverage that will allow companies to compete on cost rather than quality and guarantee that the most vulnerable parts of the population have access to the basic care they need. Beneficiaries will determine how much they pay for their benefits — insurers will offer bronze, silver, gold or platinum plans that will cover a certain percentage of the cost — but all new policies will provide comprehensive coverage and preventive care that is essential to maintaining good health. That’s a far cry from the deregulated markets that Republicans are proposing — in which insurers sell subprime policies that beneficiaries can never count on if they actually fall ill. That kind of coverage may be cheaper, but it’s also worthless for maintaining health and treating major disease.