Many people watching the debate about the repeal of the Affordable Care Act have shrugged off many of the concerns — higher costs for people with pre-existing conditions, loss of essential health benefits — because they get their insurance through an employer-sponsored group health plan. However, a provision in the Republican repeal legislation could allow could result in changes to out-of-pocket costs for Americans in these plans.
Under the Affordable Care Act, employer-sponsored insurance plans can’t place limits on annual limits on benefit payouts. They also can’t place lifetime limits on any of ten “essential” particular benefits, which includes prescription drugs and hospitalization.
Revisions made to the GOP’s American Health Care Act — the budget resolution that aims to gut the ACA — would allow states to opt out of requiring insurance companies to cover all of these essential benefits.
According to the Wall Street Journal, an amendment to the AHCA would give larger employers the ability to pick and choose which state’s benefits rules they wish to follow. The company need not even do business or have an office in a state to go with that state’s policies.
A company that wants to cut costs by imposing annual or lifetime caps on certain benefits, or by offering a plan that doesn’t cover certain benefits, could cherry pick which state’s rules best fits their goal.
“Suppose that even one state secured a waiver that allowed it to drop maternity services, mental health services, or prescription drugs,” writes Matthew Fiedler of the Brookings Institute, noting that many individual insurance plans didn’t cover these benefits before Obamacare. “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. Likewise, a large employer plan that did not want to limit enrollees’ out-of-pocket spending with respect to these services could also take this approach.”
Fiedler adds that it’s entirely possible that one state could choose to completely eliminate standards for these essential health benefits. That means that every large employer nationwide would have the ability to offer plans that don’t include this coverage.
The bigger question is would they?
Larry Levitt of the nonpartisan Kaiser Family Foundation, tells the Journal that even though a majority of employer-sponsored plans had lifetime limits on coverage before Obamacare, he doesn’t predict that many large companies would jump on this opportunity, as good benefit plans are often used to attract employees.
At the same time, Levitt concedes that “employers are always looking for ways to lower costs.”