A State-by-State Breakdown of Health Insurance Mandates and Their Costs – link to original publication on website the Council for Affordable Health Insurance (CAHI)

A health insurance “mandate” is a requirement that an insurance company or health plan cover (or offer coverage for) common — but sometimes not so common — health care providers, benefits and patient populations. They include: 

• Providers such as chiropractors and podiatrists, but also social workers and massage therapists;

• Benefits such as mammograms, well-child care and even drug and alcohol abuse treatment, but also acupuncture and hair prostheses (wigs); and, 

• Populations such as adopted and non-custodial children. 

For almost every health care product or service, there is someone who wants insurance to cover it so that those who sell theproducts and services get more business and those who use the products and services don’t have to pay out of pocket forthem.

The Impact of Mandates. While mandates make health insurance more comprehensive, they also make it more expensivebecause mandates require insurers to pay for care consumers previously funded out of their own pockets. We estimate that mandated benefits currently increase the cost of basic health coverage from a little less than 20% to more than 50%, depend-ing on the state and its mandates. Mandating benefits is like saying to someone in the market for a new car, if you can’t af-ford a Cadillac loaded with options, you have to walk. Having that Cadillac would be nice, as would having a health insurance policy that covers everything one might want. But drivers with less money can find many other affordable car options;whereas when the price of health insurance soars, few other options exist.

Why Is the Number of Mandates Growing? Elected representatives find it difficult to oppose any legislation that promises enhanced care to potentially motivated voters. The sponsors of mandates know this fact of political life. As a result, government interference in and control of the health care system is steadily increasing. So too is the cost of health insurance.

By the late 1960s, state legislatures had passed only a handful of mandated benefits; today, the Council for Affordable HealthInsurance (CAHI) has identified 1,961 mandated benefits and providers. And more are on their way.

How do state legislators justify their actions? One way is to deny a mandate is a mandate. For example, legislators may claim that requiring health insurance to cover a type of provider — such as a chiropractor, podiatrist, midwife or naturopath — is not a mandate because they aren’t requiring insurance to pay for a particular therapy. But that’s a distinction without a difference; if insurance is required to cover the provider, it must pay for the service provided. 

CAHI’s Mandated Benefits and Providers Chart. The mandate chart is broken down on a state-by-state basis into thre ecategories: benefits, providers and covered populations. Boxes with a “Y” indicate that the state has passed that particularmandate. Totals for each state and mandate are also included. Thus anyone can easily determine how many mandates andwhich ones each state has passed. (For a definition of each mandated benefit, please see http://www.cahi.org.)

How Is the Research Compiled? Since 1992, the Council for Affordable Health Insurance staff has tracked the introductionand passage of individual and small group market (i.e. not HMOs, PPOs, or the self-funded large group market) health insurance mandates in every state, but not until 2004 did we make this information available to the public. To corroborate our ownfindings, we survey every department of insurance and talk with other industry experts. 

The question is sometimes raised why our mandate count may differ from other groups that identify state mandates. We do not currently differentiate between the individual and small group markets, especially since many states are blurring that traditional distinction by allowing “groups of one” (i.e., one person is considered a group) to be classified as a small group underfederal law. Also, we do not differentiate between a benefit that is mandated and one that is only offered. Our actuaries advise us that the cost to provide that policy is the same: If the mandate is offered, it is essentially a mandated benefit because only those interested in the mandate will take advantage of it. In addition, states sometimes exempt either the individual or small group market from specific mandates, or may only apply that mandate to insurance companies that are domiciled in the state (e.g., a Blue Cross policy). Finally, states may pass a mandate in one legislative session only to come back in a later session and either expand or reduce the original bill’s scope. That propensity to revise mandate legislation in subsequent years is one of the reasons why we don’t include information on when the mandate originally passed.

Mandates and Standard Coverage. Just because we list something as a mandate doesn’t necessarily mean it should be excluded from a standard health insurance policy. Many mandates listed here should be and often are included in comprehensive coverage. The purpose of this chart is to tabulate the number of benefits mandated by the states and assess their impacton the cost of insurance — not to make judgments about which mandates should or should not be included in a health insur-ance policy.

Assessing the Cost of Mandates. Besides listing the state mandated benefits, we provide a cost assessment of each one. CAHI’s Actuarial Working Group on State Mandated Benefits analyzed company data and their experience and provided cost-range esti-mates — less than 1%, 1-3%, 3-5% and 5-10% — if the mandate were added to a policy that did not include the coverage. However, mandate legislation differs from bill to bill and from state to state. For example, one state may require insurance to cover alimited number of chiropractor visits per year, while another state may require chiropractors to be covered equally with medicaldoctors. The second will have a greater impact on the cost of a health insurance policy than the first. It would be impossible to make a detailed assessment of the cost of each state’s mandates without evaluating each piece of legislation (more than 1,900 of them). Thus, the estimated cost level indicated in the chart is considered typical but may not apply to all variations of that mandate. Further, the additional cost of a mandate depends on the benefits of the policy to which it is attached. Example: A prescription drug mandate costs nothing if a policy already covers drugs, but can be very costly if added to a policy that doesn’t coverdrugs.

A Caution about Comparisons and Cost Estimates. Because mandates can drive up the cost of health insurance, it would be easy to assume that the states with the most mandates would also have the highest premiums. While that may be true in some states, it is not necessarily so. Some mandates have a much greater impact on the cost of health insurance than others. For exam-ple, mental health parity mandates, which require insurers to cover mental health care at the same levels as physical health care, have a much greater impact on the cost of premiums than would mandates for inexpensive procedures which few people need. In addition, mental health mandates often include mini-mandates within them, like coverage for autism diagnosis and treatment.

It may be tempting to think that since a particular mandate doesn’t add much to the cost of a health insurance policy, there is no reason for legislators to oppose it. The result of this reasoning is that many states have 40, 50 or more mandates. Although most mandates only increase the cost of a policy by less than 1%,  40 such mandates will price many people out of the market. It is the accumulated impact of dozens of mandates, not just one, that makes health insurance unaffordable.

New Health Insurance Eligibility Categories. Over time, new trends emerge in health insurance coverage eligibility mandates. For example, in the past few legislative sessions we saw an increase in the “slacker mandate,” in which health insurance coverageis extended to unmarried dependents or students up to the age of 30. Most recently, we have seen new categories for health in-surance coverage eligibility emerge (e.g., “legal alien” and “elderly parent”). Maine has extended eligibility for health insurance coverage to include a person who is not yet a United States citizen but who is residing legally in this nation. Oregon added elderly parents who meet certain criteria. And at least four states — Maryland, Minnesota, New York and Texas — have extended eligibility for health insurance coverage to include a grandchild who is financially dependent on the grandparent. Finally, Illinois and Pennsylvania have added the military — U.S. armed services personnel can remain dependents for the amount of time they spent serving this country. (For more, please see CAHI’s online publication “Trends in State Mandated Benefits” at http://www.cahi.org.) 

Fortunately, there is evidence that some legislators are getting CAHI’s message. At least 30 states now require that a mandate’s cost be assessed before it is implemented. And at least 10 states provide for mandate-lite policies, which allow some individuals to purchase a policy with fewer mandates more tailored to their needs and financial situation.

The Rest of the Story. The mandates enumerated here don’t tell the whole story. States have other ways of adversely affecting the cost of health insurance. For example, several states have adopted legislation that requires health insurers to accept anyone who applies, regardless of their health status, known as “guaranteed issue.” Or they limit insurers’ ability to price a policy to accurately reflect the risk an applicant brings to the pool, known as “community rating” or “modified community rating.”

Both guaranteed issue and community rating can have a devastating impact on the price of health insurance, especially as younger and healthier people cancel their coverage, leaving the pool smaller and sicker. Thus, in the aggregate, mandates drive up the cost of health insurance. But determining the impact in a particular state requires careful analysis of each piece of mandat-date legislation, as well as other regulations that have been promulgate 

For more information on government mandates, guaranteed issue and community rating, please visit CAHI’s website at www.cahi.org.

To see the graphs link to original publication on website the Council for Affordable Health Insurance (CAHI)

Other CAHI state health reform publications available at www.cahi.org

“State Health Insurance Index 2006,” by Merrill Matthews, Ph.D., Victoria Craig Bunce, JP Wieske

“2008 State Legislators’ Guide to Health Insurance Solutions,” by JP Wieske and Christie Raniszewski Herrera

“Trends in State Mandates, 2007,” by Victoria Craig Bunce

“HSA State Implementation Report,” by Victoria Craig Bunce

About the Council for Affordable Health Insurance

The Council for Affordable Health Insurance (CAHI) is a research and advocacy association of insurance carriers active in the individual, small group, HSA and senior markets. CAHI’s membership includes health insurance companies, small businesses, physicians, actuaries and insurance brokers. Since 1992, CAHI has been an advocate for market-orientedsolutions to the problems in America’s health care system.

The Council for Affordable Health Insurance

127 S. Peyton Street, Suite 210

Alexandria, VA 22314

Phone (703) 836-6200Fax (703) 836-6550

www.cahi.org All rights reserved. 

Reproduction or distribution without the express consent of CAHI is prohibited.

Healthcare: Do we need the Lexus? – link to original article

By Jeff Jacoby

Boston Globe Globe Columnist  |  July 29, 2009

IMAGINE the sort of car you’d drive if government regulations made it illegal to sell any automobile that didn’t feature 380-horsepower direct-injection V6 engines, computer-controlled electric power steering, eight-speed automatic transmission, four-wheel-drive, automatic climate control, “smart key’’ technology, touch-screen navigation, backup cameras, LED headlights, acoustic glass, surround-sound stereo, and leather seat stitching.

If those were the minimum requirements every car had to meet before it could be sold, would you commute to and from work every day in a Lexus LS 460 or some other luxury vehicle? Well, you might, if the steep price wasn’t an obstacle. But it’s more likely you wouldn’t be driving at all. If the government barred you from buying anything but a high-end car, you’d probably have no choice but to rely on the bus or subway, or to find a job closer to home.

What is true of transportation is true of everything else: Increase the number of amenities that a product or service must include, and more consumers will be unable to pay for that product or service.

That is why one of the simplest strategies for making health insurance more affordable is to reduce the minimum number of benefits that insurers are required to cover.

In every state in the union, legislators and regulators drive up the cost of healthcare by making insurance policies more comprehensive. Rather than allow the free market to determine which medical services health plans will cover, states force consumers to pay for an array of covered benefits they may not need or want. For example, 45 states require insurance policies to include treatment for alcoholism and 34 mandate coverage of drug abuse treatment. Contraceptives are covered in 31 states, as are hairpieces in 10 states, and in-vitro fertilization in 13 states. Consumers who buy health insurance are often forced to pay for coverage of services they may consider highly dubious, such as acupuncture (benefits are mandatory in 11 states), chiropractic (46 states), osteopathy (22 states), and naturopathy (four states).

Forty years ago, there were only a handful of benefits that health policies were required by law to cover. Today, the Council for Affordable Health Insurance identifies an astonishing 1,961 mandated benefits and providers. While any one mandate may not add appreciably to the price of an insurance policy, in the aggregate their cost is huge. The Cato Institute, citing the Congressional Budget Office, estimates that state regulations increase the cost of health insurance by 15 percent. And since “each percentage-point rise in health insurance costs increases the number of uninsured by 300,000 people,’’ as scholars John Cogan, Glenn Hubbard, and Daniel Kessler point out, it is clear that the proliferation of insurance mandates is one reason why millions of Americans are uninsured.

Yet instead of pruning back this thicket of compulsory benefits, lawmakers are planting even more of them.

As Kay Lazar reported in the Boston Globe on Monday, Massachusetts legislators have filed more than 70 bills this year to increase the array of services the state’s health insurers would be required to cover. Among the benefits the pending bills would mandate are hearing aids for children, cleft palate surgery, treatment of infantile cataracts, smoking cessation products, “asthma education,’’ vitamin supplements for mitochondrial disease, post-partum depression screening – and the list goes on and on.

As it is, health insurance in Massachusetts – which already mandates coverage for more than 40 itemized benefits, providers, and patient populations – is among the nation’s most expensive. The last thing the Bay State (or any state) needs is for government to drive the cost of medical coverage higher still. It should be left to the market, not to lawmakers and lobbyists, to decide which medical services should be included in a basic-vanilla insurance policy. When lawmakers yield to special-interest pleas that this or that benefit be made compulsory, the results are less choice, higher premiums, and more individuals priced out of the market.

The key to healthcare reform is lively competition, not the dead hand of government compulsion. Legislators, take note: Enacting new mandates won’t make medical insurance more affordable. Repealing old ones just might.

Jeff Jacoby can be reached at  jacoby@globe.com .