Redesigning essential health benefits as a path to compromise
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Guaranteed coverage, mandates, Medicaid expansion and the health insurance exchanges are most often associated with the Affordable Care America Act (ACA). All-important, but it is the Essential Health Benefits (EHB) that constitute its essence and drives its engine. The House and Senate bills currently being considered provide states with flexibility for what their plans must cover.

For Republicans, flexibility to waive the restrictions of Essential Health Benefits is necessary for states to design affordable plans better able to meet the needs and preferences of their localities. For Democrats, abandonment is a punch to the gut that undermines the very integrity of their hard fought, landmark healthcare bill.

The EHB in its current form is heterogeneous and comprehensive. The requirements include hospitalization; outpatient services; emergency department services; provider services; equipment and supplies; prescription drugs; rehabilitative services; mental health, behavioral health and substance use disorder services; preventive services; maternity care; well-baby and well-child care; and durable medical equipment and prosthetics. It is the heterogeneity of the EHB that makes an efficient health care plan so difficult to design, and it is the comprehensiveness of the EHB that makes it so costly.


Previously, I described a conservative case for a single-payer option as one limited and efficient approach for those parts of the healthcare system replete with market distortions consistent with the uniqueness of emergency department care, hospital-based care and prescription drugs. The next step is to further minimize plan-specific heterogeneity of services to allow for more efficient plan design. The result would be a personal healthcare market better able to respond to the needs of patients and providers.

Medicare may provide the roadmap for an accommodation that might navigate the EHB divide between Democrats and Republicans, which otherwise appears irreconcilable. Using Medicare as a model, a program could be designed that would include the full complement of EHB services distributed among assorted plans.

This approach could satisfy both sides. Congress could set a national minimal standard for what must be included among required plans and then allow states to decide what to offer among a number of optional plans. A required plan could include emergency department care, hospital-based care and prescription drugs. Other required plans could include skilled nursing facility care, hospice care, and certain provider services. Optional plans could then be offered to cover copayments, coinsurance, deductibles and services not otherwise covered by required plans.

What is included in each plan is less important than the ability to group health care services in ways that are somewhat homogeneous and responsive to similar market forces. Health care services bedeviled with market distortions could be grouped together and included in plans designed to take advantage of the market power of a single payer or payers of substantial size. Health care services more amenable to a free market could be grouped together and included in plans designed to encourage competition and the development of new products.

With this approach, divining which health care services are required or optional and which plans are best managed at the national, state or local level becomes more readily apparent. Perhaps, the devil is in the details and the task of deciding which services are required and which are optional will be insurmountable. However, the prize for an agreement would be considerable. This approach would make it easier to rationalize Medicaid reform by treating separately long term care from health care, limit the complexity of providing coverage to persons with pre-existing conditions, encourage innovation and provide an array of choices for both patients and providers.

Organizing health plans in this manner would provide Republicans the flexibility and local decision making they seek and provide the Democrats the assurances they require. Organizing health plans in this manner would also provide end users with more opportunities to choose the health care services and plans they want and the prices they are willing to pay.

When I previously described a limited and conservative case for a single-payer option, the plan envisioned could satisfy the ideological necessity for both Democrats and Republicans alike. This is a first step in peeling the onion, layer by layer, leaving behind a health care market more amenable to the goals of the American Health Care Act (AHCA) and the Better Care Reconciliation Act of 2017 (BCRA).

Isolating and reassembling EHB component services into a lineup of plans optimally designed to be flexible, responsive and less costly is a second step, one that is necessary to achieve the multiple efficiencies needed for health care reform. Taking this commonsense approach could open a path for compromise, providing the assurances that Democrats seek and the flexibility and reform that Republicans require.

Rich Manski is Professor and Chair of the Department of Dental Public Health at University of Maryland School of Dentistry. The views expressed by contributors are their own and are not the views of The Hill.

The views expressed by contributors are their own ad are not the views of The Hill.