Rod St. Aubyn: Insurance Mandates Take Away Choice

In my last two blogs on the failures of the “Affordable” Care Act to actually control health care cost increases as the proponents promised (insert first article link here) and my suggested state solutions (insert second article link here), I discussed the role that health insurance mandates play in increasing health care costs. Let’s first define what I mean by a health insurance mandate. These are state or federal laws that demand that a particular medical service or a particular medical provider group must be a reimbursable item for all insurance products. During my tenure as a legislator and as a health insurance company lobbyist, I saw many, many health insurance mandate bills introduced into the legislature. Those bills included mandates for music therapy, chelation therapy (introduced numerous times in successive sessions), direct reimbursement for several alternative medical providers, annual mammograms, Hormone Replacement Therapy, autism applied behavioral analysis, contraceptives, among many others. One of the common arguments used by the proponents of these bills was that these mandates would save money. In reality, we looked and tracked the additional costs incurred with some mandates that previously passed and found an ever increasing utilization rate and consequently an ever increasing cost of health care expenses. These cost increases then impact annual insurance premiums. One cannot argue that some items pushed for insurance mandates are in fact an appropriate and necessary medical service. The problem is that they become law and the law is not flexible. I have opposed mandate bills for the following reasons:

Mandates take away choice. Before the ACA, insurers were able to provide different options for the health consumer based on their personal needs. For example, there used to be insurance products offered that had no maternity benefits (older adults preferred those products) and other products that covered the wide spectrum of maternity benefits often preferred by the young adults. Now with the ACA and its mandates for maternity coverage, those older adults must continue to pay higher premiums for services they will never use. While you could reasonably argue that this spreads the cost among a larger population, you can’t argue that it doesn’t raise health care costs for many individuals. I liken it to a farmer who wants to buy a very basic pickup for his farming business. He does not want a fancy audio system with a video system included. However, a mandate is like a requirement that every pickup that is sold MUST include the fancy audio system with a video system as well. A mandate takes away the consumer’s choice and raises cost.

Mandates are not based on evidence based medicine. Good medical practitioners rely on best practices in their medical field to provide excellent care. Many proponents that push mandated services have a self interest in making sure they can sell their specialized type of service and that they can be sure that they will be reimbursed by the insurance company. These services are not supported by evidence based medical researchers. By mandating these services we are only increasing utilization and health care costs which results in higher premiums.

Mandates prohibit medical science research changes. Medical research continues to evaluate current medical practices and this research often advises practitioners to alter their practices. As an example, hormone replacement therapy was an often prescribed therapy for women of a certain stage of their life. However, more recent research has identified a higher cancer risk for some women. If this was a mandated service and if an aberrant provider continued to push this type of service, needless health care costs would be consumed and potentially a patient would be subjected to higher health risk. The same goes for mammograms. The US Preventive Services Task Force (USPSTF) is a national research organization that establishes guidelines for preventive services. They have recently changed the recommended frequency for mammograms. If a mandated state law requires reimbursement for a specified frequency and research changes, this would require a change of the state mandate law where ND only meets every two years.

State Mandates do not apply to all health plans. Generally state health insurance mandates only apply to fully insured health plans. Self-funded plans, typically offered by larger employers, are usually exempt by state laws and are governed by the federal government. When I lobbied for a large insurer, about ½ of their covered people had coverage on a self-funded plan. As a result, the state mandates only applied to about half of the company’s insured.

Under the ACA states must pay for the cost of any new state mandates. Under provisions of the ACA, states were required for 2014 and 2015 to select a state benchmark plan to set the essential health benefits that all plans must meet. ND decided upon the Sanford Health Plan for the State’s selected benchmark plan. The state must pay for the cost of any new state mandate that is adopted after the selection of this benchmark plan.

Luckily, the ND Legislature was very careful about adopting health insurance mandates. If you compare ND with our neighboring state of Minnesota you will find that they have many more health insurance mandates and consequently higher health insurance costs. Most other states also have more mandates than ND. ND legislators established a law during the 2001 Legislative Session to carefully evaluate any health insurance mandate bill before it is considered. It required that the mandate bill be reviewed by an independent actuary to determine a possible cost/benefit. In addition, if the bill passes it must only apply to the state employee health plan (NDPERS) for two years to determine the actual cost/benefit. This legislation helped control the adoption of health insurance mandates and has been considered by other states.

Benefits offered in health plans should be based on public demand and subjected to best practices in evidence-based medicine. In summary, health insurance mandates are generally very poor public policy and only increase the cost of health insurance.