Individuals who purchase health insurance in either the ACA regulated small group or individual markets will be guaranteed that their plans will cover gender affirming care. This is an administrative action that will also allow for individuals who need this care to be able to qualify for zero premium plans.
The Biden administration authorized Colorado to require gender-affirming care coverage as an essential health benefit, a landmark decision for transgender people. https://t.co/Y0lvlqcdkz
— Bloomberg Law (@BLaw) October 12, 2021
Why does it matter that Colorado made gender affirming care an “essential health benefit?”
An Essential Health Benefit (EHB) is a benefit that must be provided. More importantly, for the sake of my lines of research, an EHB benefit is eligible to be paid for with federal premium subsidies. If Colorado mandated gender affirming care for transsexual individuals but did not make it an EHB, needed and neccessary care would lead to a significant increase in net premiums. If Colorado did not mandate gender affirming care, insurers who elected to offer a voluntary benefit would be taking on significant financial risk as only individuals who knew that they needed gender affirming care AND who knew that they were likely to have greater than the incremental premium costs for that care would sign up for the policies that offered that care benefit. It would produce a benefit specific death spiral. Since it is now an EHB, all insurers must offer it and the cost of care is spread through the entire population.
Insurers can still play games with benefit design as gender affirming care is used to treat long lasting, non-acute conditions. Individuals know if they need this type of care well in advance of receiving it. This means gender affirming care can be a means of risk selection and screening. Risk screening by insurers through the means of offering truly hideous benefit packages for gender affirming care or sending people through a paperwork thicket of pre-approvals can lead to some insurers getting a disproprortionate number of people who have potential high cost needs. The next step is for the Center for Medicare and Medicaid Services to begin to risk adjust for gender dysphoria and related diagnosises so that insurers either become actively indifferent instead of hostile to covering individuals who need gender affirming care or aggressively pursue these individuals by offering better benefits.