When it was first proposed back in March, the American Health Care Act (AHCA) did not have enough support to pass the House, and thus was not brought up for a vote. (We covered the bill’s potential changes that would impact employers here.) House Republicans subsequently amended the bill as part of a compromise between the House Freedom Caucus and the White House. As revised, the AHCA maintains many of the provisions from the original proposed legislation, including the ban on annual lifetime limits for Essential Health Benefits (EHBs). However, it also includes one significant change regarding EHBs that could dramatically affect employer health plans.
10 essential coverage requirements
The federal EHB standards generally include the following:
- Ambulatory patient services
- Emergency services
- Maternity and newborn care
- Mental health and substance use disorder services including behavioral health treatment
- Prescription drugs
- Rehabilitative and habilitative services and devices
- Laboratory services
- Preventive and wellness services and chronic disease management
- Pediatric services, including oral and vision care
While these EHBs remain a federal standard, under the AHCA a state may receive a waiver allowing the state to define the essential health benefits differently in that state.
What changes if a state waives federal EHB requirements?
If a state chooses to waive out of these requirements, then health insurance providers in that state, including employer sponsored health plans, would no longer be required to offer the 10 essential coverage requirements. Instead, their EHBs would be determined by the state.
In addition, under current Affordable Care Act (ACA) regulations, it’s possible that large group health plans have the option to comply with another state’s coverage requirements. From a practical standpoint, that means that employer sponsored health plans might be able to select the narrowest state’s definition of the EHBs. Since they are free to impose annual and lifetime limits on non-EHBs, this provision has the potential to greatly expand such plans’ ability to impose annual and lifetime limits.
AHCA impact on EHBs if it’s passed
Passage of the AHCA as is is far from certain. But, if passed as is, the AHCA could afford large group health plans greater flexibility in structuring their benefits. Nonetheless, it is not even clear that the ACA allows employers to define EHBs for purposes of the ban on annual or lifetime limits based on state definitions, rather than the federal standard.We will continue to keep you informed as the health care landscape evolves and as potential opportunities emerge.