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I'm paying for what?! Mandated health insurance benefits
When you sign up for a group health insurance plan through your employer or buy an individual policy, you want its benefits to fit your needs.
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But you may not realize that there have been a growing number of benefits that health plans must provide under state law -- whether you want them or not.
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Last year, there were a combined 2,156 health insurance mandates in the 50 states and District of Columbia, according to a 2010 "Health Insurance Mandates in the States" report from the Council for Affordable Health Insurance (CAHI). Mandates are laws that require health plans to pay for certain procedures and benefits. The most common mandates include maternity coverage for hospital stays, mammogram screenings and newborns. Less-common mandates include coverage for hormone-replacement therapy, breast reduction surgery and a shingles vaccine.
Some state mandates apply only to small-group health plans and others apply to both small-group and individual plans. A few apply only to health insurance companies that are domiciled in a certain state. None, however, apply to self-insured group health plans, which are regulated only by the federal government (most large employer groups are self-insured).
Health insurance mandates popular with politicians and the public
The concept of state-mandated benefits has grown in popularity in the past few decades. In the late 1960s, state legislatures passed only a handful of medical insurance mandates, according to CAHI. Last year's count of 2,156 was 17 percent more than in 2006.
Are you already paying for . . . maternity benefits? |
According to the CAHI report, "for almost every health care product or service, there is someone who wants insurance to cover it so that those who sell the products and services get more business and those who use the products and services don't have to pay out of pocket for them."
J.P. Wieske, executive director for CAHI, says that some mandates are not necessarily a bad idea.
"In general there probably are cases where mandates make sense, as long as legislators are cognizant of how mandates increase costs," he says.
According to CAHI's analysis, health insurance mandates increase the cost of basic health coverage from slightly less than 10 percent to more than 50 percent -- depending on the mandate, type of policy and the state where an insurer operates.
By themselves, most mandates don't increase the cost of coverage by much. Mandates related to prostate cancer screening, reconstructive surgery and coverage for chiropractic services, for example, increase the cost of health insurance by less than 1 percent each. But costs escalate with the accumulation of mandates, Wieske says. A few low-cost mandates might not noticeably impact health insurance premiums, but 50 such mandates would.
Health insurance mandate trends
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According to CAHI, Rhode Island has the most health insurance mandates of any state, with 69 mandated benefits. It’s followed by Maryland with 67, Minnesota with 64, Texas with 60 and Connecticut with 59. Idaho, with 13 mandated benefits, has the least number of mandates, followed by Alabama with 19, Hawaii with 23, Michigan with 25 and Utah with 25.
Wieske says that states with a large number of mandates tend to take a fairly prescriptive approach to regulating their insurance markets, while states with fewer mandates look more to the free market to prevail.
According to CAHI, the following types of mandates are growing in popularity:
- Autism
To date, 25 states have passed autism insurance mandates. Previously autism fell under mental health benefits, but a growing number of legislatures are passing standalone mandates for autism treatment.
- Diabetes
Insurers already cover treatment for the disease, but most states have passed some sort of diabetes-related mandate; 47 states have mandated coverage for diabetic supplies, for instance. Because diabetes is so prevalent, diabetes mandates are politically popular. "It's an easy one to pass," Wieske says.
- Cancer screening
Mandated coverage for cancer screening has grown especially popular, with 50 mandates for mammography screening, 36 for prostate cancer screening, 34 for colorectal cancer screening, 31 for cervical cancer screening and seven for ovarian cancer screening.
Skirting health insurance mandates
According to CAHI, at least 30 states require a cost analysis of a mandate before it can be implemented and at least 10 states provide for so-called "mandate-lite" policies (which allow some people to buy a policy without the mandated benefits, to reduce cost). But those are not used heavily, Wieske says, because states gear those policies to people who can't otherwise buy affordable health insurance. In order for you to qualify for a mandate-lite policy, you typically must have to gone without health insurance for a certain period of time.
It's unclear how state mandates will be applied in 2014 when health insurance exchanges will be operating, as required by health care reform law. States and the federal government are setting up the exchanges to serve as one-stop marketplaces where consumers and small groups can compare and purchase health insurance. Those plans will have to meet certain federal standards.
Consumers will also be able to buy insurance outside the exchanges. Whether all state mandates will apply to policies sold inside and outside the exchanges has yet to be determined.
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