Essential Health Benefits

One of the concessions President Trump made to the Freedom Caucus yesterday, apparently, was the removal of a requirement for health insurance companies to provide essential health benefits. Apparently. At this point, the last minute flurry of deals and negotiations have resulted in a bill that contains provisions that have not been publicly disclosed or scored by the Congressional Budget Office.

The vote on the AHCA is scheduled for Friday afternoon – even though few people have seen it in its entirety.

Members of the Freedom Caucus argue that there are still too many regulations in the AHCA and, as such, it impedes free market principles which they claim will help drive down premiums and health care costs. They successfully extracted a promise from President Trump to eliminate regulations requiring insurance companies to provide essential health benefits.

What are essential health benefits? Basically, Obamacare requires insurers to create plans that cover a wide variety of potential illnesses and conditions so that costs can be spread out among a greater number of people. Creating a large “risk pool” makes it possible to cover very expensive medical procedures that a smaller group of people  will need. While it may seem illogical at first glance to have single women pay for insurance that covers prostate cancer or men to cover maternity costs, the more people who contribute small amounts to cover these expenses makes it possible to spread the cost for more expensive procedures among a very large number of people.

Very clearly the biggest losers will be unhealthier and older Americans who will incur more health care related expenses. If younger Americans can choose health insurance plans that don’t cover the kinds of expenses – hip replacements, for example – that older Americans are more likely to incur, then the costs for plans for older Americans will increase dramatically.

Similarly, Americans with diabetes or those who develop expensive chronic illnesses will have to pay much more for their insurance.

While the Freedom Caucus members’ demand to remove essential health benefits from the AHCA is in line with their dedication to and support of the principles of free markets, in the end this demand will result in skyrocketing premiums for older and less health Americans.

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