John Locke Update / Research Brief

Want Affordable Insurance? Scale Back on Health Benefit Mandates

posted on in Health Care, Health Care & Human Services
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If conservatives in Congress have a Plan B for health reform, it’s essential that they decentralize power to the states. Let states enact policies that the majority of their constituents want, not Washington. If Vermont wants to try to achieve a sustainable single-payer model again, go for it. If North Carolina wants to be first in health care freedom, even better.

To some degree, the failed House GOP health reform bill, the American Health Care Act (AHCA), did include provisions that would grant states more flexibility over the delivery of health care and the design of health insurance. States would have been able to restructure critical safety net programs like Medicaid. They could have had the opportunity to create federally funded high-risk insurance pools for patients with pre-existing conditions.

Another notable provision up for debate was whether states are given the option to keep or get rid of the Affordable Care Act’s (ACA) ten essential health benefit mandates (EHBs). Health benefit mandates force insurance companies to either cover or offer expanded services that benefit particular patients and providers in their policies. The ACA’s EHB regulation requires insurance companies to expand coverage for various preventative care services at no direct out of pocket cost to policyholders. Services include pediatric dental, vaccinations, maternity care, mental health, and cancer screenings. EHBs are just one example of how the ACA has increased the federal government’s authority over the insurance industry. Traditionally, states have predominantly held regulatory power over insurance carriers – including the number and scope of these benefit mandates.

For now, North Carolinians will have to wait and see whether the EHB mandate will stay. But this shouldn’t stop the state legislature from re-examining the 57 coverage mandates state officials have passed into law since the 1970s. It is often the case that many state-level health policy decisions come with federal ties, but legislators at the General Assembly can act on this issue without federal intervention.

Scaling back on mandates can help lower the cost of health insurance premiums. According to the Council for Affordable Health Insurance, health benefit mandates over time have contributed to premiums rising between 20 and 50 percent. The North Carolina Coalition for Fiscal Health estimates that benefit mandates are costing North Carolina policyholders over $218 million per year under the assumption that the cost for these services is spread among 1.5 million policyholders in the non-group and employer markets that don’t self-insure.

For some services, per-member-per-month costs are minuscule. Policyholders pay 27 cents per month for marriage therapist services. Pastoral counselors cost a penny. Chiropractic treatment amounts to $1.62. This is one of the main reasons why it’s politically palatable for lawmakers to pass benefit mandate legislation. Mandate legislation also shields them from being called out for explicit tax increases.

The fact that there are now 2,200 mandates nationwide – up from almost zero in 1970 – further demonstrates that it’s generally feasible for special interests and medical providers to get their way, even if very few policyholders utilize these services.

Next week, the House health committee is scheduled to discuss HB 283, the Telehealth Fairness Act. If passed into law, insurance companies would have to reimburse providers for any health service provided via telemedicine that is otherwise covered during an in-office visit. The game changer here is that telemedicine has been an innovative method to deliver care in a more cost-effective manner, but this mandate would reimburse telemedicine services at the same rate as treatment performed in a physical office setting.

Improving access to health care is important, but benefit mandates aren’t always necessary to solve this problem. The market has been working to extend important health care benefits to patients without paternalistic advances. Insurers like Blue Cross and Blue Shield have decided on their own to offer plans that cover telemedicine psychiatric services, psychotherapy, health behavior assessments, diabetic counseling, and more. Other physicians who practice direct primary care provide telehealth as a value-added benefit that is included in their patients’ monthly membership fees.

Furthermore, many large self-insured companies that are exempt from state mandates under the 1974 Employment Retirement Income Security Act (ERISA) offer their employees comprehensive health benefits because they value their workforce. The State Health Plan can also be exempt from mandate legislation – another entity that provides generous coverage.

Katherine Restrepo is the Director of Health Care Policy at the John Locke Foundation. Before joining the John Locke Foundation, she interned at the Cato Institute under the direction of Michael Cannon, Director of Health Policy Studies. … ...

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