Recent government mandates in the state of Connecticut raise the cost of insurance for all. While the act aims to offer more comprehensive services, it may, in actuality prove as a disservice by raising the overall cost of insurance to the states residents. Read on to learn more.
By Greg Bordonaro
While tax increases, paid sick leave and union concessions took up most of the attention during the recent legislative session, lawmakers passed a flurry of new health insurance mandates that will raise the cost health insurance for employers.
In all, seven new mandates — some of which business lobbyists have fought for years — passed the legislature and have been signed into law by Gov. Dannel P. Malloy.
A health insurance “mandate” is something for which an insurance company or health plan must offer coverage, and whose costs typically get passed onto employers.
Health mandates have been a hot political issue in Connecticut for years. The business community has long voiced opposition, citing costs. But supporters say cost concerns are overblown and that the benefits outweigh the price.
The divide illustrates a central issue in the broader health care debate. The question of how to control health care costs, while also mandating adequate coverage that prevents and treats illnesses effectively, has been difficult to answer.
New mandates passed this year:
• Expand coverage requirements for certain patient clinical trials, breast MRIs, colonoscopies and prostate cancer screenings;
• Increase the maximum annual coverage for ostomy-related supplies from $1,000 to $2,500;
• Require coverage for bone marrow testing;
• And place new restrictions on insurance companies that require the initial use of over-the-counter drugs for pain treatment.
“It is a fundamental truth that as you add benefits you increase costs,” said Keith Stover, a lobbyist for the state’s health insurance industry. “The math isn’t that complicated.”
According to a report by the Council for Affordable Health Insurance (CAHI), which is funded by the insurance industry, Connecticut had 59 mandates at the end of 2010, making it the fifth most demanding state.
While mandates make health insurance more comprehensive, they also make it more expensive, requiring insurers to pay for care patients previously funded out of their own pocket. Those expenses often get passed onto employers through higher premiums.
Larger companies that are self-insured or are regulated under federal ERISA laws do not have to comply with state mandates.
“It is a significant contributing factor to the high cost of health coverage,” Stewart said, adding that while mandates may not appear expensive on an individual basis, the cumulative effect has a real impact.
For years, Connecticut was operating in the dark when it came to understanding the costs of health insurance mandates, but lawmakers passed legislation in 2009 that requires the state Insurance Department to begin attaching price tags to proposed or existing mandates.
According to the 2010 report, which was prepared by the University of Connecticut Center for Public Health and Health Policy, the 45 benefit mandates that were examined account for about 22 percent of the premium costs of group insurance coverage in Connecticut.
The report warned, however, that the figures are likely overstated.
The top five mandates account for 12 percent of the total medical cost for group plans, with cancer coverage being the most expensive at $11 per member per month.
The report said medical technology and advancements in medicine in general have contributed to increased costs of health insurance, as have other factors like the aging population.
Most mandates passed this year do not yet have a price tag.
State Healthcare Advocate Victoria Veltri said she believes opponents of mandates overstate the cost impact, and that many of the mandates required in Connecticut would be covered by insurance companies anyway.
For example, at least four insurance companies in Connecticut already provide coverage to one new mandate passed this year that requires insurers to cover MRI screenings for breast cancer if a mammogram shows dense breast tissue.
And many mandates, like requiring expanded coverage for colonoscopies or prostrate screenings, are preventative in nature and will potentially decrease costs in the future by detecting diseases early on or help curb chronic illnesses before they set in, Veltri said.
“Anytime a mandate passes, we have the same concern of whether the benefit will outweigh the cost,” Veltri said. “But sometimes public policy demands we do some of these mandates. Anytime we are talking about a procedure that could mean the difference between life or death, it’s really not that much of a burden to expect coverage.”
One new mandate that has stirred controversy restricts insurance companies from requiring patients to use less expensive alternative brand name or over-the-counter drugs for pain treatment before turning to a more costly brand name drug prescribed by a physician.
Stover said insurance companies often use what’s called step therapy, or requiring the use and failure of one drug before another drug may be covered, because some medications are expensive but don’t have a better clinical track record then the less expensive generic brand.
The new law essentially bans that practice. Stover said that will drive up health care costs, without guaranteeing improved clinical outcomes. “The bill was done at the behest of the pharmaceutical industry wrapped in the sheep’s clothing of patient care advocacy,” Stover said. “It doesn’t make sense economically or medically.”
But Ken Ferrucci, a lobbyist for the Connecticut State Medical Society, said the law is a good one because it prevents insurance companies from interfering with the doctor-patient relationship.
“The determination about what medications should be prescribed for patients should be made by a trained physician, not an insurance company,” Ferrucci said, adding that the new law does allow doctors to prescribe generic drugs if they believe that is the best pain treatment.
As the debate over mandates continues, there is also a new consideration that state officials will have to follow closely. It’s related to the federal health care reform law, which could actually shift the costs of some mandates onto the state.
Beginning January 2014, the Affordable Care Act will require all health insurance coverage sold through state insurance exchanges to include certain “essential health benefits,” which have not yet been defined.
The federal government will provide subsidies to some individuals who buy coverage through the exchange, which will be an online marketplace where insurers compete for consumers.
But if states want to require coverage within the exchange that exceeds the essential benefits, the states will have to pay for the added costs.
Jeannette DeJesús, who is the special adviser to Malloy on health care reform, said the new rules present a serious issue that state lawmakers will have to deal with.
She said when the essential benefits are defined by the federal government, lawmakers will have to figure out how to provide high quality and affordable health care that is not also going to bankrupt the state.
“There are a lot of things we do now we may not be able to do,” DeJesús said, adding that the state can no longer make decisions about health care that push costs down the road.
