Rents From the Essential Health Benefits Mandate of Health Insurance Reform.

The essential health benefits mandate constitutes one of the most controversial health care reforms introduced under the U.S. Affordable Care Act of 2010. It bears important theoretical and practical implications for health care risk and insurance management. These essential health benefits are examined in this study from a rent-seeking perspective, particularly in terms of three interrelated questions: Is there an economic rationale for standardized, minimum health care coverage? How is the scope of essential health services and treatments determined? What are the attendant and incidental costs and benefits of such determination/s? Rents offer ample incentives to business interests to expend considerable resources for health care marketing, particularly when policy processes are open to contestation. Welfare losses inevitably arise from these incentives. We rely on five case studies to illustrate why and how rents are created, assigned, extracted, and dissipated in equilibrium. We also demonstrate why rents depend on persuasive marketing and the bargained decisions of regulators and rentiers, as conditioned by the Tullock paradox. Insights on the intertwining issues of consumer choice, health care marketing, and insurance reform are offered by way of conclusion.