Health Policy$ense

Chart of the Day: Essential Health Benefits

Few premium savings from cutting EHB package

The package of Essential Health Benefits (EHBs) ushered in by the Affordable Care Act (ACA) has been under attack in the GOP-led Congress. The latest incarnation of the Senate health reform plan includes the Cruz amendment, which would allow insurers to offer plans that do not cover all ten categories of EHBs.

The folks at Urban Institute have done policymakers a favor by calculating how much each category of benefit contributes to the cost of premiums on the individual market. The pie chart below shows that the categories often targeted for cuts, such as maternity care, pediatric dental and vision benefits, and rehabilitative and habilitative care, are mere slivers of the premium pie. In a separate analysis, the authors calculate that outpatient mental health/substance use disorder treatment accounts for about 1 percent of premiums.

Linda J. Blumberg and John Holahan. The Implications of Cutting Essential Health Benefits: An Analysis of Nongroup Insurance Premiums Under the ACA, Urban Institute, July 2017

Blumberg and Holahan conclude:

The per-person costs of insuring EHBs are reasonably low, and account for small percentages of the overall premium when the costs are spread broadly across a large population with diverse ages and health care risks. Experts note that placing the costs fully on the users of health care can make those services unaffordable for those who need them.

The upshot here is that the vast majority of premiums are going toward benefits that most of us would agree are essential: prescription drugs, inpatient and outpatient care, emergency care. Policymakers looking for a way to reduce premiums by weakening or eliminating the EHB package might best look elsewhere.