States steer away from broad health benefit mandates

Lawmakers view the cost of new coverage requirements as a drawback at a time when rising insurance rates are fueling complaints from employers.

By Joel B. Finkelstein, amednews staff. Sept. 1, 2003.

Washington -- In the face of rising insurance premiums, many states are pulling back from health benefit mandates long opposed by managed care companies. But at least one bucked state and national trends by passing a universal health care law.

Over the past few years, states have passed hundreds of requirements aimed at ensuring that patients receive coverage for a variety of medical services. However, it is becoming less and less clear to state lawmakers what services are truly necessary.

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According to policy experts, the impetus for bills establishing state benefit mandates often is complaints from a small group of people.

"You see individual legislators going to bat for an individual constituent," said Jeffrey L. Gabardi, senior vice president of state affairs for the Health Insurance Assn. of America.

In recent years, state legislators seem to be shying away from broad measures, instead favoring more narrowly defined mandates. This type of legislation is more likely to address a single medical condition or circumstance than a group of conditions, said Richard Cauchi, senior health care policy specialist with the National Conference of State Legislatures. Small measures are easier to push through than large bills that contain multiple mandates.

Still, insurers almost categorically oppose mandates of any size or kind.

Maine is the only state to adopt a universal health care plan.

While coverage requirements may help a few patients, they raise premiums for everyone, Gabardi said.

But that argument goes both ways, Cauchi said.

If only a few people benefit, then the mandate is not likely to cost very much, he said.

Even so, the cost argument is becoming more persuasive to lawmakers, who are being pressured by employers, many of whom are facing insurance premium increases in the double digits.

Businesses, especially small businesses, "are being swept away by a health insurance system in crisis," said Daniel B. Walsh, president of the Business Council of New York State, in testimony before the state Senate's Standing Committee on Insurance.

"We ask, in the strongest terms, that the Legislature reject higher taxes on health insurance and reject the imposition of new health insurance mandates," Walsh testified.

17 states considered single-payer proposals this year.

Messages like this one from the business community have encouraged many states to form advisory boards to review proposed benefit mandates for cost effectiveness and medical necessity.

It is not really a politician's role to define conditions, such as obesity, or to decide when surgery is justified, said HIAA's Gabardi.

A dozen states already have such panels and another half-dozen are in the process of establishing them. While their main purpose is to keep lawmakers from passing new and onerous mandates, these boards also should be put to use reviewing mandates already on the books, insurers said.

Evidence appears to indicate that these panels and the concerns that spawned them already may be curbing the passage of new mandates.

While there were 450 mandates proposed this year, state legislatures passed only 36. That is down from 46 enacted last year and 51 in 2001.

Some states considered, but ultimately did not pass, other legislation to limit coverage requirements. Several legislatures debated imposing a moratorium on them. Some state legislatures considered proposals to allow health plans to offer mandate-free insurance plans, while others looked at proposals that would have required health insurers to offer at least one plan that covers the mandated benefit.

Universal coverage on the table

Lawmakers in several states dared to go where Congress feared to tread, proposing ambitious universal health care plans for their states. However, Maine was the only state to actually adopt such a proposal.

Dirigo Health aims to expand the current patchwork of private and public programs to provide access to all Maine residents within five years. Part of the increased coverage will be achieved by lowering the threshold of Medicaid eligibility to 125% of the poverty level for individuals and 200% for families.

The law also reinstates funds for Maine's Physician Incentive Program, which provides quarterly bonuses to primary care physicians, in an effort to ensure that there will be enough practices to serve this expanded population.

Dirigo, named after Maine's motto, which is Latin for "I lead," is given the task of offering residents affordable health insurance while also offering broader options through private insurance.

Unlike other public programs, Dirigo will pay physicians market rates. The program also will provide subsidies to encourage individuals and small business to buy insurance.

In addition, the law contains cost- and quality-control measures designed to improve Maine's health care system as a whole.

Several other states also discussed universal health coverage proposals.

A referendum on a single-payer system in Oregon was defeated by voters, mainly because of cost concerns and strong opposition from the insurance industry, which would have been shut out of the new system.

Seventeen state legislatures also considered single-payer proposals, and Nevada passed a bill that contains a provision requiring the study of such an approach.

By contrast, legislation in California would incorporate private health plans into a universal coverage system. That proposal is still under consideration, as state lawmakers attempt to meld it with a bill supported by Blue Shield of California.

While the details have not yet been worked out, the California proposal is expected to include a "pay-or-play" strategy in which employers could offer workers coverage or pay the state to do so.