CBO Warns Against Major Changes to Essential Health Benefits

Analysts with the nonpartisan Congressional Budget Office said Tuesday they would not count people with minimal insurance as being covered under an alternative to the Affordable Care Act.

The CBO and the Joint Committee on Taxation anticipate that under some ACA replacement proposals — which don’t clearly specify what type of coverage could be purchased with federal tax credits — insurers may start offering non-group plans that would not meet their expectations for adequate coverage, according to the blog post published Tuesday.

Under the ACA, insurers must cover 10 essential health benefits, as defined by the secretary of Health and Human Services. Some replacement proposals suggest limiting or eliminating those benefits, or giving the power to states to decide which benefits must be covered, in order to lower costs.

“If there were no clear definition of what type of insurance product people could use their tax credit to purchase, everyone who received the tax credit would have access to some limited set of health care services, at a minimum, but not everyone would have insurance coverage that offered financial protection against a high-cost or catastrophic medical event,” CBO analysts Susan Yeh Beyer and Jared Maeda wrote in the blog post.

If states all have different standards for essential benefits, that could also be problematic, they warn. “Without a federal standard, some states might not impose any regulations that would govern the depth and extent of coverage and that would define what insurance products qualify for tax credits,” Beyer and Maeda wrote.

One of the main challenges facing Republicans is how to repeal and replace the ACA without taking away a policy from the roughly 20 million people who have gained coverage under the 2010 law.

Republican leaders have proposed a shift away from the ACA’s subsidies in favor of a federal tax credit to help people afford health coverage. Because CBO and JCT would not necessarily count everyone who receives a tax credit as having coverage, “the number of people with coverage would probably be smaller than the estimate of the number of people who would receive the tax credit,” Beyer and Maeda wrote.