Too Many State-Mandated Insurance Benefits Could Put Coverage Out of
Reach for Some
Reprinted from HEALTH PLAN WEEK, the industry's leading source of business,
financial and regulatory news of health plans, PPOs and POS plans.
By Steve Davis, Managing Editor, (sdavis@aishealth.com), November 4, 2010
While some state-mandated insurance benefits have little direct impact on insurance
premiums, scores of mandates — requiring coverage for everything from in vitro
fertilization to acupuncture — can make insurance more expensive and, in some
cases, unaffordable. Coverage for autism, for example, is now mandated in 25 states
— up from 11 two years ago. Collectively, 2,156 state mandates have been enacted
nationally, according to a report released Oct. 20 by the Council for Affordable Health
Insurance, an industry-backed organization based in Alexandria, Va. Individual
states can have anywhere from just 13 mandates (Idaho) to 69 (Rhode Island).
“As implementation of the new federal health insurance law further drives up the
cost of health insurance, the cost of adding new mandated benefits will become a
more important issue,” says CAHI Executive Director J.P. Wieske. While a large
number of mandates don’t necessarily translate to higher premiums, Wieske says if
there are a lot of mandates, “odds are there will be higher-than-average [coverage]
costs.”
But mandates often are ineffective at improving benefits for patients because state
lawmakers allow health insurers to interpret the requirements, says Sara
Rosenbaum, chair of the Dept. of Health Policy at The George Washington University
Medical Center. She disagrees that state mandates force health insurers to boost
premiums because the most costly ones affect only a small fraction of members.
“I think some of this is a canard,” she asserts. “Having studied mandates, I’ve found
that most of them are barely worth the paper they’re written on.” Mandates, she
adds, tend to be written in a way that allows insurers to interpret their meaning. And
the legal requirements included in mandates “actually are quite wishy-washy.”
Wieske says mandates are meaningless if the condition is already covered by most
policies. Case in point: While 38 states mandate coverage for diabetic supplies,
virtually every health plan covers them. “You will be hard pressed to find an insurer
that doesn’t cover diabetes,” he says. And while a prescription drug mandate costs
nothing if a policy already covers drugs, it can be very expensive if it’s added to a
policy that doesn’t.
Mandates Boost Costs up to 17%
Health insurers say state mandates do have an impact on costs. In terms of sheer
number of mandates, Maryland — with 67 — is second only to Rhode Island,
according to CAHI. CareFirst, Inc., which operates Blues plans in Maryland, northern
Virginia and Washington, D.C., says the mandates boost coverage costs in Maryland
by as much as 17% in the fully insured market.
“Mandates clearly have an impact on affordability and can influence employers’
decisions to move to
self-insured status where they can establish their own benefit packages,” says
CareFirst spokesperson Michael Sullivan.
According to CAHI, Rhode Island has more mandates than any other state. While he
wouldn’t confirm CAHI’s estimate, Rhode Island Health Insurance Commissioner
Chris Koller says mandates haven’t increased coverage costs significantly in his
state. Infertility treatment, he says, is one of the state’s most costly mandates and
has boosted coverage costs by two or three percentage points. And that percentage
could be higher because it doesn’t capture the cost of premature births resulting
from the treatment. “So that’s a pretty expensive mandate, but politically a very
popular one,” he tells HPW. “Find me a politician, or for that matter a business, who
wants to oppose fertility.”
Every mandate adds incrementally to the cost of health coverage. And there’s a
danger that adding just one new mandate could be the one that makes coverage
unaffordable for an employer or individual, says former Maryland Insurance
Commissioner Al Redmer.
Mandates “are good for the people who need a particular service, as long as they can
afford the policy once [coverage for] that service is added,” explains Redmer, now
president of Landmark Insurance and Financial Group. Redmer also served as CEO of
Coventry Health Care of Delaware, Inc. Prior to his days as insurance commissioner
in the early part of the decade, Redmer was in the state legislature. For state
lawmakers, he says, it can be difficult to oppose a mandate after children with a
condition are brought into a hearing. On the other side of the room, Redmer adds,
there might be a couple people in suits representing the insurance companies who
oppose the mandate because of the potential cost.
“There is compelling story after compelling story about the need to help these people
afford treatment,” he tells HPW. “And there usually is a financial case to be made
that by treating the condition early, it will be less expensive to treat in the long run.”
Early in his career, Redmer says the cost caused him to vote against a mandate to
expand child wellness visits. “People called me a ‘baby hater’ for a month, and that
affected my future voting record. I wasn’t as quick to say ‘no’ as a result.”
Half of States Mandate Autism Coverage
Mandated coverage for autism is growing more quickly than any other mandate.
Public interest groups with strong financial backing, and celebrity endorsements,
have pushed 25 states to require the coverage. Applied behavior analysis and other
therapies, which autism-support groups say are most effective, can cost as much as
$50,000 per child per year, according to CAHI. Insurers, however, contend that there
is no clear standard of care to determine the appropriate therapy. Autism had
previously fallen under the broader category of mental health.
Wieske suggests that state budget shortfalls could give lawmakers a reason to move
some publicly covered services — such as ambulance transportation — to commercial
carriers. According to the report, 13 states require health insurers to include
coverage for ambulance transportation.
But mandates can vary widely from state to state and have a broad range of cost
implications for insurers. One state, for example, might require health plans to cover
a limited number of chiropractic visits per year, while another state might mandate
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that chiropractors be covered equally with medical doctors. That type of mandate will
have a greater impact on the cost of a health insurance policy, according to CAHI.
To see the 2010 edition of Health Insurance Mandates in the States, visit
www.cahi.org.
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