Legislators focus on keeping health insurance costs down

Lawmakers passed few mandated benefit bills but did expand public assistance in several states this year.

By Joel B. Finkelstein — Posted July 12, 2004

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Washington -- Health-related measures not passed by state legislatures this year are as notable as the ones they did pass.

For starters, the number of new mandated health benefits hit an all-time low, according to data collected by the BlueCross BlueShield Assn.

Such mandates come in two varieties: They require that all plans in the state pay for a specific procedure, test or treatment or that plans offer a product that pays for such services.

Either way, there were only eight such measures approved this year, down from 25 last year.

Critics charge that with each mandate added, the cost of health insurance increases for everyone in the state.

"A lot of lawmakers are cautious about doing anything that could cause prices to rise," said Susan Laudicina, director of state services research at the association.

However, there are other factors which may be behind the drop-off, said Richard Cauchi, health care program manager with the National Conference of State Legislatures.

Most state legislatures focus on getting the bulk of laws passed during the first half of a session, which was last year. Several were in limited session this year, working exclusively on their budgets.

That said, the recent performance does seem to confirm a trend in which state lawmakers feel they have put in place adequate protections and are moving on to other areas of regulation, said Cauchi.

Another explanation: Lawmakers have come to believe that mandates can do as much harm as good.

While those regulations requiring preventive services are clearly for the public good, other types have been motivated more by public opinion than proven medical benefit, said David Atkins, MD, MPH, chief medical officer in the Center for Outcomes and Evidence at the Agency for Healthcare Research and Quality.

The study of experimental treatments, as with bone marrow transplants in women with aggressive breast cancer, can actually be slowed down by mandates that prematurely imply the legitimacy of the approach, he said. Patients desperate for some hope of cure pushed for mandated coverage of the therapy, but it ultimately proved ineffective and sometimes even life-shortening.

Such concerns may have encouraged some lawmakers to step back. In three states, measures were adopted allowing health plans to offer products free of some of those obligations.

For example, plans in Florida, a state with 45 mandated benefits, will now be able to offer reduced-mandate health insurance after the products are reviewed by the state insurance commissioner.

Affordable and available

These "mandate-light" products may be a sign of another growing state trend -- efforts to enable insurers to offer more affordable health plans.

Most legislatures opted to allow health plans to offer high-deductible insurance that is compatible with the health savings account provision of last year's Medicare reform law. Proposals allowing more flexibility for health insurers also were successful.

Meanwhile, lawmakers in several states worked to expand or bolster their high-risk health insurance pools, a move that can have the subsequent effect of relieving pressure on premiums in the private market. Iowa, for instance, has a plan to direct its residents into a high-risk pool as the state phases out the current policy of guaranteed issue.

And despite deep, persistent budget gaps, several states made efforts to expand public coverage or to offer subsidies.

The Florida Legislature found more money for the State Children's Health Insurance Program, opening enrollment to 90,000 children currently on the waiting list. In Idaho, companies are now eligible for a $1,000 tax credit for every new employee who is eligible for employer-sponsored health insurance.

Lawmakers in four states also considered measures that would have slowed the growth of or actually imposed decreases in health insurance premiums. None were approved.

Interest in cost-cutting led to more attention on rising spending for prescription drugs and inspired state legislatures to take up 50 bills designed to make lower-cost medications available, according to NCSL data.

While the measures are wide and varied, many attempt to benefit from statewide or multistate bulk purchasing. Others involved allowing or regulating the redistribution of unused drugs from nursing homes and other facilities.

Additionally, some proposals would tap into savings available through the Public Health Services Pricing Program, also known as the 340B discount price program. In many states, lawmakers attempted to address the increasing public attraction to drug reimportation and online pharmacies.

States are also hoping to impose new regulations on pharmacy benefit managers and disclosure of marketing practices, both aimed at mandating more transparency in drug costs, said Cauchi. Those measures continue a trend seen last year.

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The 2004 tally

Although it was a slow year for health insurance legislation at the state level, several legislatures took action.

  • 11 states created or expanded high-risk health insurance pools.
  • 8 passed laws designed to encourage health insurers to offer low-cost products.
  • 4 expanded access through either public programs or tax subsidies.
  • 5 restricted the use of Social Security numbers by health insurance plans.

Source: BlueCross BlueShield Assn.

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