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You are here: Home / Anderson On Health Insurance / EHB and cost spreading

EHB and cost spreading

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Milliman has a good paper on the actuarial impacts of Essential Health Benefits(EHB) with actual pricing attached to some of the benefits. Every health plan in 2017 that is offered on Healthcare.gov pays at least 89% of their claims dollars for EHB. The overwhelming majority pay more than 99% of their claims dollars to EHB.

First, here is a good illustration of the relative importance of each category of benefit:

As you can see, doctor visits (ambulatory patient services), hospitals, presriptions, labs and phyical rehab make up the overwhelming majority of the spending on EHBs. There is not a lot of fat in there unless we allow people to buy “not cancer” policies with specific, high cost disease exclusions. Now let’s look at one of the vulnerable EHB, maternity care:

Rolling maternity benefits up into the standard benefit package raises everyone’s rates by the price of a single entree at Olive Garden every month. Splitting the benefit out as an optional benefit makes men better off and concentrates all of the pain on women either through higher premiums and or higher out of pocket limits. The reasonable second order effect is that Medicaid will take on a lot more births that it covers.

There is only money in the EHB’s and the main EHB’s are fairly well protected in my opinion. So the EHB’s that are not well protected (maternity, mental health, child dental/vision) just don’t have a lot of money attached to them.

Reader Interactions

11Comments

  1. 1.

    rikyrah

    Maternity, MENTAL HEALTH, child dental/vision…

    Sigh….

    Thanks for the info Mayhew.

    PS- are you going to do a post on the proposed changes to Trumpcare?

  2. 2.

    WereBear

    Just look at the YOOOOOGE chunk that is prescription medicines. What a ripoff; when you consider that most of the research is done at taxpayer expense.

  3. 3.

    Mike J

    @rikyrah: I’ve only skimmed, biggest thing I saw was drug testing poor people. Almost certainly the result will be millions spent to discover 20 or 30 people from whom they can strip healthcare.

    Oh, they moved the tax cuts for the rich up too, so they take effect sooner. Probably more in there, but I’ll wait for the people who have to read it to do so and save my beautiful mind.

  4. 4.

    gvg

    I fail to see how splitting maternity out benefits all men. It only benefits single men who never intend to reproduce, possibly gay men. Dads have to pay for births too, willingly or unwillingly (lawsuits and garnished wages). It’s actually a complaint if a dad discovers “his” child’s birth costs aren’t covered. Many men consider insurance coverage when choosing employers if they can, and care deeply when it has poor coverage. Once they are married, they look at family coverage, not just themselves. some families get their coverage through a wife’s policy, and a spouse is still going to consider it poor insurance if it doesn’t cover maternity. If they have to pay out of pocket, men consider themselves hurt. In other words, more insurance than not is for a whole family. Next the republicans “thinkers” will try to eliminate coverage of childhood shots because “men” don’t need them, ignoring a whole bunch of similar issues. Most of the lawmakers are married. How can they not know this? It’s like they think being petty to women is exciting to their voters which currently does seem to be the case for reasons I don’t get. and of course they just don’t understand how insurance works or even what it is.

  5. 5.

    dr. bloor

    Rolling maternity benefits up into the standard benefit package raises everyone’s rates by the price of a single entree at Olive Garden every month.

    This needs to be re-worked. If you tell those assholes that some brown woman’s maternity benefits are costing them a trip to Cholesterol Garden, they’ll freak. Maybe something like “…by the price of a coastal elite’s Cosmopolitan at the Union Square Cafe.”

  6. 6.

    Barbara

    I am still scratching my head at the notion that men have nothing to do with women becoming pregnant and are completely indifferent to the health of their own offspring. Rather than this being binary to women and men, in reality, it is binary to all people over a certain age — let’s say 50 — who are done with procreating. Yet those people depend on younger people with reproductive potential to keep their own vastly higher costs of utilization down (through risk sharing). But of course, in the world where people are competing to see who they can get away with throwing overboard, women and children are usually the first ones in the water. It’s virtually tribal.

  7. 7.

    MomSense

    @Barbara:

    Isn’t there a value to society to have healthy women and babies? I just can’t wrap my head around the level of selfishness these Repubs have that they resent maternal/fetal health. I bet a bunch of these greedy pigs are opposed to reproductive health and choice, too.

    Selfishness and greed are not good governing principles.

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Trackbacks

  2. […] David Anderson of Duke points us to a recent paper by Milliman, the preeminent cost-analysis firm in healthcare, about how much these essential benefits actually add to the cost of health insurance and the consequences of removing the mandates. The paper finds that eliminating the most vulnerable mandates, such as maternity care, will reduce average premiums somewhat but drive costs for people who need those services sky-high and transfer much of the cost to other public programs. The net gain for society is almost invisible. To put it another way, the savings are an illusion. In fact, eliminating the mandates might even cost the federal government more money. […]