Mandated Essential Health “Benefits”: What could go wrong? – by Robert Nelson, MD


By now you’ve probably heard that the Affordable Care Act (Obama Care) will mandate that all policies sold of the insurance exchanges (marketplaces), and eventually all policies sold privately, must cover 10 essential health benefits.  Here are some of the mandated covered items: prescription drugs, emergencies, hospitalization, doctor visits, maternity care, mental health, rehabilitative services, some lab services and preventative care.

All this sounds great!  Or does it?  Do you think that the providers of these many services will be likely to cater to the patient OR will they have allegiances to the purveyor of the “contracts” that pay them?

Based on the way this is structured, it would appear we haven’t learned anything from 40 years of skyrocketing prices driven mostly by third-party contracts that use largely other people’s money to pay claims on services that we haven’t shopped for nor have a clue what they really cost.

Back to the essential covered items: What about selection?  Yes, there is a mandate for “coverage”, but there is no mandate for participation by health care providers.  There will be lots of “covered benefits,” but very likely there will be a deficit of selection when it comes to choosing where to get care.  Many Medicaid recipients experience this frustration regularly.  This mandate is tantamount to forced participation in a rigged game at a casino.  The house is always going to win.  There will be an occasional payout for show and to keep others in the game, but the patient is NEVER in control.  Why?  Because it isn’t their money.  Someone else (federal government) tells them what coverage they must have, how much it will cost and how much of other people’s money will subsidize that cost.  There is no rational way to factor in the benefit or outcome or value to the patient; because the patient is no really choosing based on quality or value, they are choosing a “covered service” and hoping they get quality!

What if you just don’t want or need some of these benefits?  Why “insure” a risk that you don’t need to indemnify against or that you can afford on our own?  What if you want to shop and pay-as-you-go for some of these items?

Do you think a contractually mandated system where premiums and fees are heavily subsidized and providers are scarce will be driven by competition OR more by bureaucratic cronyism?  Will a mandated third-party payment scheme such as this promote price transparency, healthy competition and value OR will it continue to obscure the true cost of care and blunt the effect of healthy market forces?

What if I know for instance, based on extensive family history and my aversion to drugs, that there is a very slim chance that I will ever need any mental health, drug or alcohol services.  Why should I have to have “coverage” for those?

What if I’m a low test utilizer and I’ve found a lab that charges very low rates if I pay cash; lower than any reimbursements from an insurance policy?  Why should I have to maintain coverage for something that I can get cheaper in the open market by paying for it with cash?

What if my doctor, who doesn’t take any insurance at all, provides me with all my primary care & preventative services at a competitive price and with a higher level of service than I can get from any of the covered “plans”?  Why should I insure that?

But I’m sure it will all work out just fine.  What could go wrong???!!!

Robert W. Nelson, MD

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