Topic:
HEALTH INSURANCE;
Location:
INSURANCE - HEALTH - MANDATES;

OLR Research Report


February 11, 2004

 

2004-R-0148

MANDATED BENEFITS FOR HEALTH INSURANCE POLICIES

By: Janet Brierton, Associate Legislative Attorney

Sarah Black, Legislative Fellow

You asked for a list of mandated benefits for group and individual health insurance policies. You also asked for information regarding the repeal of mandates or other mandate alternatives.

SUMMARY

Laws that require insurers to provide coverage for a variety of health care services, medical treatments, and specific diseases are typically referred to as mandated benefits. We identified 42 mandated benefits for group health insurance and 38 for individual health insurance under Connecticut statutes. Table 1 and Table 2 provide a list of Connecticut's mandated benefits for group and individual health insurance policies, respectively.

In the 1990s, legislators nationwide introduced hundreds of mandated benefit bills. According to the National Conference of State Legislators (NCSL), some argue that these mandates play a significant role in the recent double-digit health insurance premium increases. NCSL indicates that individuals and employers—in particular, small employers—are in peril of dropping or canceling their health insurance coverage as a result.

During the past few years, the introduction of mandated benefit legislation has diminished nationally. To address costs, legislators began to shift their focus and are introducing bills that require a financial study of existing or proposed mandates. In addition, legislators in some states are also introducing bills that allow insurers to sell policies—typically referred to as "stripped-down" or "bare-bones" policies—that exempt insurers from providing coverage for all or some of the state-imposed mandated benefit requirements enacted in years past.

Mandating insurance carriers to provide coverage for a specified service or treatment or allowing insurers to sell "bare-bones" policies is a hotly contested issue among state legislators. The debate over mandated benefit and anti-mandate legislation typically centers on consumer protection versus cost. Proponents contend that mandates are necessary to ensure comprehensive health care for consumers. Opponents argue that mandates drive up the cost of premiums, thus contributing to the growing number of uninsured.

Since 1987, 32 states have introduced legislation to study the financial effects of assessing new coverage requirements and evaluate current coverage mandates. Table 3 highlights 25 states that have enacted mandated benefit study requirements.

Table 4 highlights "bare-bones" legislation proposed in 2003, including legislation enacted in Arkansas and Colorado. Arkansas House Bill 1344 amended legislation enacted in 2001. North Dakota also enacted similar legislation in 2001. In 2002, New Jersey, Florida, and Utah enacted quasi-bare-bones legislation. Kansas, North Carolina, and North Dakota also recently enacted legislation regarding mandated benefits.

Finally, we solicited input from Robinson & Cole, a law firm that advocates on behalf of the insurance industry, the Connecticut Business and Industry Association, and Connecticut Citizens Action Group regarding mandated benefits. Their comments are summarized below.

MANDATED BENEFITS IN CONNECTICUT

Table 1: Group Health Insurance Mandated Benefits

Mandated Benefit

Description

Citation

Preexisting Condition Coverage

May not impose preexisting condition exclusion beyond 12 months after effective date of coverage, and exclusion may only relate to conditions manifesting themselves or for which medical advice, diagnosis, care, or treatment was recommended or received six months before the policy's effective date.

CGS 38a-476(b)(1)

Availability of Psychotropic Drugs

No mental health care benefit provided under state law, or with state funds or to state employees may limit the availability of the most effective psychotropic drugs.

CGS 38a-476b

Experimental Treatments

Procedures, treatments, or drugs that have completed a Phase III FDA clinical trial. Appeals process expedited for those with a life expectancy of less than two years.

CGS 38a-513b

Mental Illness Parity

Diagnosis and treatment of mental or nervous conditions. Coverage cannot differ from the terms, conditions, or benefits for the diagnosis or treatment of medical, surgical, or other physical health conditions.

CGS 38a-514

Mentally or Physically Handicapped Dependent Children

When dependent coverage terminates at a certain age, coverage must continue if child is both mentally or physically handicapped and dependent upon insured for support.

CGS 38a-515

Newborns and Adopted Children

Injury and sickness, including care and treatment of congenital defects and birth abnormalities, for newborns from birth and for adopted children from legal placement for adoption.

CGS 38a-516 and 38a-549 (as amended by PA 03-70, sec. 2)

Birth-to-Three

At least $5,000 annually for medically necessary early invention services.

CGS 38a-516a

Hearing Aids for Children

Hearing aids for children 12 and under. Coverage may be limited to $1,000 within a 24-month period.

CGS 38a-516b

Dental Coverage

Medically necessary general anesthesia, nursing, and related hospital services for in-patient, outpatient, or one-day dental services.

CGS 517a (as amended by PA 03-58, sec. 2)

Accidental Ingestion or Consumption of Controlled Drugs

Emergency medical care for the accidental ingestion or consumption of controlled drugs. Coverage is subject to a minimum of 30 days inpatient care and a maximum $500 for outpatient care per calendar year.

CGS 38a-518

Hypodermic Needles and Syringes

Hypodermic needles and syringes prescribed by a prescribing practitioner for administering medications.

CGS 38a-518a

Off-Label Drug Prescriptions for Cancer

If a prescription drug is recognized for treatment of a specific type of cancer, a policy cannot exclude coverage of the drug when it is used for another type of cancer.

CGS 38a-518b

Protein Modified Food and Specialized Formula

Amino acid modified and low protein modified food products when prescribed for the treatment of inherited metabolic diseases. Medically necessary specialized formula for children up to age 3. Food and formula must be administered under the direction of a physician.

CGS 38a-518c

Diabetes

Laboratory and diagnostic tests for all types of diabetes. Medically necessary equipment, drugs, and supplies for insulin-dependent, insulin using, gestational, and non-insulin using diabetes.

CGS 38a-518d

Diabetes Self-Management Training

Outpatient self-management training prescribed by a licensed health care professional. Coverage is subject to the same terms and conditions as other policy benefits.

CGS 38a-518e

Prescription Drugs Removed from Formulary

A prescription drug that has been removed from the list of covered drugs must be continued if the insured was previously using the drug for the treatment of a chronic illness and it is deemed medically necessary.

CGS 38a-518f

Prostate Screening

Laboratory and diagnostic tests to screen for prostate cancer for men who are symptomatic, have a family history, or are over 50.

CGS 38-518g

Lyme Disease Treatment

Lyme disease treatment including not less that 30 days of intravenous antibiotic therapy, 60 days of oral antibiotic therapy, or both, and further treatment if recommended by a rheumatologist, infectious disease specialist, or neurologist.

CGS 38a-518h

Pain Management

Access to a pain management specialist and coverage for pain treatment ordered by such specialist.

CGS 38a-518i

Ostomy Appliances and Supplies

If policy covers ostomy surgery, policy must also cover up to $1000 per year for medically necessary ostomy-related appliances and supplies.

CGS 38a-518j

Colorectal Cancer Screening

Colorectal cancer screening. Frequency of screening to be based on recommendations by the American College of Gastroenterology.

CGS 38a-518k

Home Health Care

Home health care including (1) part-time or intermittent nursing care and home health aide services; (2) physical, occupational, or speech therapy; (3) medical supplies, drugs and medicines; and (4) medical social services. Coverage can be limited to no less than 80 visits per year and, for a terminally ill person, no more than $200 for medical social services. Coverage can be subject to an annual deductible of no more than $50 and a coinsurance of no less than 75%, except that a high deductible plan used to establish a medical savings account is exempt from the deductible limit.

CGS 38a-520 (as amended by PA 03-78)

Comprehensive Rehabilitation Services

Group health insurance must offer coverage for comprehensive rehabilitation services, including (1) physician services, physical and occupational therapy, nursing care, psychological and audiological services, and speech therapy; (2) social services provided by a social worker; (3) respiratory therapy; (4) prescription drugs and medicines; (5) prosthetic and orthotic devices and; (6) other supplies and services prescribed by a doctor.

CGS 38a-523

Occupational Therapy

If policy covers physical therapy, it must provide coverage for occupational therapy.

CGS 38a-524

Ambulance Services

Ambulance service when medically necessary. Payment must be on a direct pay basis where notice of assignment is reflected on the bill.

CGS 38a-525

911 Calls

Cannot require preauthorization for 911 calls.

CGS 38a-525a

Physician Assistant and Certain Nurses

Services of physician assistants; certified nurse practitioners, certified psychiatric mental health clinical nurse specialists, and certified nurse-midwives.

CGS 38a-526

Veteran's Home and Hospital

Cannot exclude coverage for services provided by the Veteran's Home and Hospital.

CGS 38a-529

Mammography

Baseline mammogram for woman 35 to 39 and one every year for woman 40 and older.

CGS 38a-530

Breast Cancer Survivors

May not refuse to cover applicant because of breast cancer if applicant has remained free of breast cancer for at least five years.

CGS 38a-530a

Obstetrician-Gynecologist

Direct access to participating in-network ob-gyn for gynecological examination, care related to pregnancy, and primary and preventive obstetric and gynecologic services required as result of a gynecological examination or condition. Female enrollees may also designate participating ob-gyn or other doctor as primary care provider.

CGS 38a-530b

Maternity Care

Minimum 48-hour hospital stay for mother and newborn after vaginal delivery and minimum 96-hour hospital stay after caesarian delivery.

CGS 38a-530c

Mastectomy

Minimum 48-hour hospital stay after mastectomy or lymph node dissection or longer stay if recommended by physician.

CGS 38a-530d

Contraceptives

If prescription drugs are covered, then prescription contraceptives must be covered. An employer or individual may decline contraceptive coverage if it conflicts with religious beliefs.

CGS 38a-530e

Treatment of Alcoholism

Expenses incurred in connection with medical complications of alcoholism such as cirrhosis of the liver, gastrointestinal bleeding, pneumonia, and delirium tremens.

CGS 38a-533

Chiropractic Services

Services of a chiropractor to same extent as coverage for a physician.

CGS 38a-534

Preventive Pediatric Care

Preventive pediatric care at the following intervals (1) every 2 months from birth to 6 months, (2) every 3 months from 9 to 18 months, and (3) annually from 2 to 6 years of age. Coverage is subject to any policy provisions that apply to other services covered under the policy.

CGS 38a-535

Infertility

Group health insurance (not including HMOs) must offer coverage for infertility diagnosis and treatment, including in vitro fertilization.

CGS 38a-536

Treatment for Leukemia, Tumors and Breast Implant Removal

Surgical removal of tumors of at least $500 per year, outpatient chemotherapy of at least $500 per year, reconstructive surgery of at least $500 per year, non-dental prosthesis of at least $300 per year, surgical removal of breasts due to tumors of at least $300 per year for each breast, and medically necessary breast implant removal of at least $1,000 per year. Coverage must also cover treatment of leukemia subject to the same terms and conditions as other benefits under the policy.

CGS 38a-542(a) and (b)

Breast Reconstruction after Mastectomy

Reconstructive surgery on non-diseased breast for symmetrical appearance. Coverage is subject to the same terms and conditions as other benefits under the policy.

CGS 38a-542(c)

Cancer Clinical Trials

Routine patient costs relating to cancer clinical trials. Such trials must have peer-reviewed protocols approved by one of several federal organizations.

CGS 38a-542a – 38a-542g

Craniofacial Disorders

Medically necessary orthodontic processes and appliances for treatment of craniofacial disorders for people under age 18. Coverage is not required for cosmetic surgery.

PA 03-37, sec. 2

Table 2: Individual Health Insurance Mandated Benefits

Mandated Benefit

Description

Citation

Preexisting Condition Coverage

May not impose preexisting condition exclusion beyond 12 months after effective date of coverage, and exclusion may only relate to conditions manifesting themselves or for which medical advice, diagnosis, care, or treatment was recommended or received 12 months before the policy's effective date.

CGS 38a-476(b)(2)

Availability of Psychotropic Drugs

No mental health care benefit provided under state law, or with state funds or to state employees may limit the availability of the most effective psychotropic drugs.

CGS 38a-476b

Experimental Treatments

Procedures, treatments, or drugs that have completed a Phase III FDA clinical trial. Appeals process expedited for those with a life expectancy of less than two years.

CGS 38a-483c

Mental Illness Parity

Diagnosis and treatment of mental or nervous conditions. Coverage cannot differ from the terms, conditions, or benefits for the diagnosis or treatment of medical, surgical, or other physical health conditions.

CGS 38a-488a

Mentally or Physically Handicapped Dependent Children

When dependent coverage terminates at a certain age, coverage must continue if child is both mentally or physically handicapped and dependent upon insured for support.

CGS 38a-489

Newborns and Adopted Children

Injury and sickness, including care and treatment of congenital defects and birth abnormalities, for newborns from birth and for adopted children from legal placement for adoption.

CGS 38a-490 and 38a-508 (as amended by PA 03-70, sec. 1)

Birth-to-Three

At least $5,000 annually for medically necessary early invention services.

CGS 38a-490a

Hearing Aids for Children

Hearing aids for children 12 and under. Coverage may be limited to $1,000 within a 24-month period.

CGS 38a-490b

Dental Coverage

Medically necessary general anesthesia, nursing, and related hospital services for in-patient, outpatient, or one-day dental services.

CGS 491a (as amended by PA 03-58, sec. 1)

Accidental Ingestion or Consumption of Controlled Drug

Emergency medical care for the accidental ingestion or consumption of controlled drugs. Coverage is subject to a minimum of 30 days inpatient care and a maximum $500 for outpatient care per calendar year.

CGS 38a-492

Hypodermic Needles and Syringes

Hypodermic needles and syringes prescribed by a prescribing practitioner for administering medications.

CGS 38a-492a

Off-Label Drug Prescriptions of Cancer

If a prescription drug is recognized for treatment of a specific type of cancer, a policy cannot exclude coverage of the drug when it is used for another type of cancer.

CGS 38a-492b

Protein Modified Food and Specialized Formula

Amino acid modified and low protein modified food products when prescribed for the treatment of inherited metabolic diseases. Medically necessary specialized formula for children up to age 3. Food and formula must be administered under the direction of a physician.

CGS 38a-492c

Diabetes

Laboratory and diagnostic tests for all types of diabetes. Medically necessary equipment, drugs, and supplies for insulin-dependent, insulin using, gestational, and non-insulin using diabetes.

CGS 38a-492d

Diabetes Self-Management Training

Outpatient self-management training prescribed by a licensed health care professional. Coverage is subject to the same terms and conditions as other policy benefits.

CGS 38a-492e

Prescription Drugs Removed from Formulary

A prescription drug that has been removed from the list of covered drugs must be continued if the insured was previously using the drug for the treatment of a chronic illness and it is deemed medically necessary.

CGS 38a-492f

Prostate Screening

Laboratory and diagnostic tests to screen for prostate cancer for men who are symptomatic, have a family history, or are over 50.

CGS 38-492g

Lyme Disease Treatment

Lyme disease treatment including not less that 30 days of intravenous antibiotic therapy, 60 days of oral antibiotic therapy, or both, and provide further treatment if recommended by a rheumatologist, infectious disease specialist, or neurologist.

CGS 38a-492h

Pain Management

Access to a pain management specialist and coverage for pain treatment ordered by such specialist.

CGS 38a-492i

Ostomy Appliances and Supplies

If policy covers ostomy surgery, policy must also cover up to $1000 per year for medically necessary ostomy-related appliances and supplies.

CGS 38a-492j

Colorectal Cancer Screening

Colorectal cancer screening. Frequency of screening to be based on recommendations by the American College of Gastroenterology

CGS 38a-492k

Home Health Care

Home health care including (1) part-time or intermittent nursing care and home health aide services; (2) physical, occupational, or speech therapy; (3) medical supplies, drugs and medicines; and (4) medical social services. Coverage can be limited to no less than 80 visits per year and, for a terminally ill person, no more than $200 for medical social services. Coverage can be subject to an annual deductible of no more than $50 and a coinsurance of no less than 75%, except that a high deductible plan used to establish a medical savings account is exempt from the deductible limit.

CGS 38a-493

(as amended by PA 03-78)

Occupational Therapy

If policy covers physical therapy, it must cover occupational therapy.

CGS 38a-496

Ambulance Service

Ambulance service when medically necessary. Payment must be on a direct pay basis where notice of assignment is reflected on the bill.

CGS 38a-498

911 Calls

Cannot require preauthorization for 911 calls.

CGS 38a-498a

Physician Assistant and Certain Nurses

Services of physician assistants, certified nurse practitioners, certified psychiatric mental health clinical nurse specialists, and certified nurse-midwives.

CGS 38a-499

Veteran's Home and Hospital

Cannot exclude coverage for services provided by the Veteran's Home and Hospital.

CGS 38a-502

Mammography

Baseline mammogram for woman 35 to 39 and one every year for woman 40 and older.

CGS 38a-503

Breast Cancer Survivors

May not refuse to cover applicant because of breast cancer if applicant has remained free of breast cancer for at least five years.

CGS 38a-503a

Obstetrician-Gynecologist

Direct access to participating in-network ob-gyn for gynecological examination, care related to pregnancy, and primary and preventive obstetric and gynecologic services required as result of a gynecological examination or condition. Female enrollees may also designate participating ob-gyn or other doctor as primary care provider.

CGS 38a-503b

Maternity Care

Minimum 48-hour hospital stay for mother and newborn after vaginal delivery and minimum 96-hour hospital stay after caesarian delivery.

CGS 38a-503c

Mastectomy

Minimum 48-hour hospital stay after mastectomy or lymph node dissection or longer stay if recommended by physician.

CGS 38a-503d

Contraceptives

If prescription drugs are covered, then prescription contraceptives must be covered. An employer or individual may decline contraceptive coverage if it conflicts with its or his morals.

CGS 38a-503e

Chiropractic Services

Services of a chiropractor to the same extent as coverage for a physician.

CGS 38a-507

Treatment for Leukemia and Tumors

Surgical removal of tumors of at least $500 per year, outpatient chemotherapy of at least $500 per year, reconstructive surgery of at least $500 per year, and non-dental prosthesis of at least $300 per year.

CGS 38a-504(a) and (b)

Breast Reconstruction after Mastectomy

Reconstructive surgery on non-diseased breast for symmetrical appearance. Coverage is subject to the same terms and conditions as other benefits under the policy.

CGS 38a-504(c)

Cancer Clinical Trials

Routine patient costs relating to cancer clinical trials. Such trials must have peer-reviewed protocols approved by one of several federal organizations.

CGS 38a-504a - 38a-504g

Craniofacial Disorders

Medically necessary orthodontic processes and appliances for treatment of craniofacial disorders for people under age 18. Coverage is not required for cosmetic surgery.

PA 03-37, sec. 1

THE DEBATE ON MANDATED BENEFITS

National Conference of State Legislators (NCSL) monitors state activity concerning mandated benefits. The following information is taken almost verbatim from NCSL's Health Policy Tracking Service.

Overview

In the 1990s, legislators nationwide introduced hundreds of bills requiring insurers to provide coverage for a variety of health care services, medical treatments and specific diseases (typically referred to as mandated benefits). According to NCSL, legislators and governors across the country, spurred by the managed care backlash and constituent demand, mandated that insurers provide coverage for a range of procedures, including preventive screenings for cancers and osteoporosis, newborn hearing screenings, clinical trials, chiropractors, reconstructive breast surgery, and diabetes drugs and devices. NCSL reports that policymakers now face double-digit health insurance premium increases caused, some argue, by the mandates placed on insurers and individuals and employers—in particular, small employers— are in peril of dropping or canceling their health insurance coverage.

The last U.S. census indicates that 43 million people are uninsured; an estimated eight out of 10 of these are from working families. As individuals and employers continue to face health insurance premium increases, the number of uninsured is expected to rise, further taxing the country's public health care system. According to a survey released in 2002 by the Kaiser Family Foundation (KFF) and Health Research and Educational Trust (HRET), employers faced an average 12.7 percent increase in health insurance premiums that year. A survey conducted by Hewitt Associates shows that employers encountered an additional 13 percent to 15 percent increase in 2003. For 2004, the outlook is for more double-digit increases. If premiums continue to escalate at their current rate, employers will pare down the benefits offered, shift a greater share of the cost to their employees, or be forced to stop providing coverage.

According to NCSL, the introduction of mandated benefit legislation has diminished during the past few years. NCSL reports that, to address costs, legislators began to shift their focus and are introducing bills that require a financial study on existing or proposed mandates. In addition, NCSL notes that legislators also are introducing bills that allow insurers

to sell policies—typically referred to as "stripped-down" or "bare-bones" policies—that exempt insurers from providing coverage for all or some of the state-imposed mandated benefit requirements.

The Debate

Mandating insurance carriers to provide coverage for a specified service or treatment or allowing insurers to sell "bare-bones" policies is a hotly contested issue among state legislators. The debate over mandated benefit and anti-mandate legislation typically centers on consumer protection versus cost. Proponents contend that mandates are necessary to ensure comprehensive health care for consumers. However, opponents generally argue that mandates drive up the cost of premiums, thus contributing to the growing number of uninsured.

Advocates of mandated benefit legislation claim that mandates are necessary to ensure adequate health care for consumers by providing needed coverage for a particular disease, treatment or service. Advocates believe that legislation may be the only way to ensure coverage, particularly for those who purchase individual policies or for individuals who are covered under a small business policy. In addition, supporters contend that preventive mandates—such as cancer screenings—can offset public costs by reducing the amount spent to treat long-term diseases through the diagnosis of a disease at an early stage.

A study completed by the General Accounting Office (GAO) concluded that mandates contribute to a rise in health care costs, which subsequently are passed to consumers through higher premiums (GAO/HEHS-96-161, August 1996). As addressed in various studies, some mandates—such as those for drug abuse treatment and infertility—may substantially increase the cost of a policy. Because of rising costs, employers may choose to discontinue offering health insurance or may pass along the increase to the employees through various cost-sharing mechanisms.

The National Center for Policy Analysis (NCPA) estimates that 25 percent of the uninsured are priced out of the market by state mandates. A study commissioned by the Health Insurance Association of America (HIAA) and released in January 1999, reported that "... a fifth to a quarter of the uninsured have no coverage because of state mandates, and federal mandates are likely to have larger effects."

Opponents also believe that mandated benefits impose unfair obligations on employers, since they are not required to offer health insurance coverage at all.

Policy Alternatives to Mandating Coverage

Recently, many state legislatures have considered or are considering legislation that requires a financial analysis to accompany a proposed mandated benefit bill. Legislation also has been introduced to study existing mandated benefit requirements. To make health insurance coverage more affordable, policymakers also are introducing measures that allow insurance companies to sell "bare-bones" policies. Legislators also have passed measures that halt further action on mandated benefit bills, require any mandate to be first applied to the state employee program, and establish pilot programs to determine the success of "bare-bones" policies.

Mandated Benefit Studies

To determine costs of state-imposed coverage requirements, lawmakers are considering measures that require a financial analysis to accompany mandated health benefit bills. Since 1997, 32 states have introduced legislation to study the financial effects of assessing new coverage requirements and evaluate current coverage mandates. Table 3 highlights those states that have enacted mandated benefit study requirements.

Table 3: Mandated Benefit Study Laws

State

Year of Enactment

Requirement

Arkansas

2001

Establishes the Arkansas Advisory Commission on Mandated Health Insurance Benefits to address the social, financial, and medical impact of current and proposed mandated benefits. Requires that an annual report be submitted each Dec. 31 immediately preceding a regular session of the General Assembly.

California

2002

Requests the University of California to assess the public health, medical, and financial impact of proposed mandated benefit legislation if the sponsor or the relevant policy committee chair requests it. For FY 02-03 through FY 05-06 insurers will be assessed a fee to fund the university's work; a fund in the state treasury, the Health Care Benefits Fund, is established. Effective until Jan. 1, 2007.

Colorado

1992, 2003

Requires that a report be submitted to the legislative committee of reference that addresses both the financial and social impact of a proposed mandated benefit bill. In 2003, the Commission on Mandated Health Insurance Benefits was established to develop and maintain a system and program of data collection to assess the impact of mandated health care benefits. The commission is required to review and evaluate existing mandatory health care coverage provisions and assess proposed mandated benefits as requested by the General Assembly. Insurers will be assessed a fee to fund the work of the commission if it is determined that the projected operating revenue will not be adequate over the next 12 month period to cover the expenses of the commission. Effective until July 1, 2005.

Florida

1987, 2002

Requires every person or organization seeking consideration of a mandated benefit proposal to submit to the Agency for Health Care Administration (AHCA) and the committees that have jurisdiction, a report that assesses the social and financial impacts of the proposed coverage. In 2002, the enacted budget bill contained a provision requiring the Office of Legislative Services, in consultation with the AHCA, to contract for a study to assess the effects of mandated health benefit coverage for substance abuse, contraceptives, infertility, mental health services for people with a serious mental illness, medical nutrition therapy, occupational therapy, and expansion of the current mandate for off-label use of FDA-approved pharmaceuticals. A report was to be submitted by Feb. 1, 2003.

Georgia

1989

Requires every mandated health benefit bill to be subject to review by the General Assembly prior to enactment. Requires the insurance commissioner to issue a report that assesses the financial effects of the proposed benefit within 20 days of receiving the bill.

Hawaii

1987, amended in 1990 and 1996, 2001

Before any mandated health benefit bill can be considered, a concurrent resolution must be passed requesting the auditor to prepare and submit to the legislature a report that assesses the social and financial effects of the proposed mandated benefit. In 2001, HCR 129 established a mandated benefit advisory task force to recommend legislation on the mandated benefit process and for the establishment of a permanent advisory board to review mandated benefits.

Indiana

2003

Establishes a task force to review existing mandated benefits and mandated benefit proposals and report to the legislative council no later than Dec. 31 of each year.

Kentucky

1998, amended in 2003

Requires a sponsor of any mandated benefit bill to attach to the measure a financial impact statement before final consideration by the standing committee. Until a financial impact statement is prepared and attached, action on the bill will not be ordered. The insurance department must prepare the report within 30 days after the bill sponsor's request.

Louisiana

1997, 2001

Requires every mandated benefit bill, prior to its consideration by any committee, to have an impact report attached to it that gives a reliable estimate of the negative or positive fiscal effects of the measure. In 2001, a bill was enacted requiring that the insurance department conduct an actuarial cost analysis on the following mandates: transportation by professional ambulance services, including air or surface transport, of all the newly born to the nearest hospital for treatment of illnesses, injuries, congenital defects and complications of premature birth; group coverage for treatment of alcohol and drug abuse; group coverage for cleft lip and palate; hearing-impaired interpreter expenses; early screening and detection; immunizations; attention deficit/hyperactivity disorder; osteoporosis; cancer treatment drugs; diabetes; dental procedures, anesthesia and hospitalization; rehabilitative physical therapy, occupational therapy and speech and language therapy; clinical trials; and severe mental illness. Any mandate enacted or reenacted after Jan. 1, 2001 must undergo an actuarial costs analysis.

Maine

1991, amended in 1997 and 2001

If the majority of the members of the committee with jurisdiction over a mandated benefit proposal support it, the committee may refer the proposal to the Bureau of Insurance for review and evaluation. A proposed mandate may not be enacted unless the review has been completed.

Maryland

1998,
amended in 1999 and 2003

Requires the Maryland Health Care Access and Cost Commission to determine the costs of existing mandates and make recommendations to the General Assembly regarding decision-making criteria for reducing the number of mandates or the extent of coverage. Requires that a report be submitted before Jan. 1, 2004 and every four years thereafter.

Massachusetts

2002

Requires the Division of Health Care Finance and Policy to conduct a review and evaluation of a mandated benefit proposal within 90 days upon the request of a joint standing committee of the General Court or the committee on ways and means. If the division fails to produce a report with 90 days, the committee may report favorably on the mandated health benefit bill without including a review and evaluation from the division.

North Carolina

2001

Indicates that the Legislative Research Commission may study the cost of mandated benefits. A final report is to be provided to the 2003 General Assembly.

North Dakota

2001, amended in 2003

Requires any legislative measure that mandates health insurance coverage to be accompanied by a cost-benefit analysis before being acted on by any committee.

Ohio

2001

The chairperson of a standing committee may request the legislative service commission to review a bill to determine if the bill includes a mandated benefit. If the bill does contain a mandated benefit, the presiding officer of the house that is considering the bill may request an independent health care actuarial review.

Oklahoma

1998

Requires the Senate or House fiscal staff to submit a report on the social and financial impact of any mandated health benefit. Indicates that the legislature and the executive branch must consider the report prior to the adoption of any mandated health benefit.

Oregon

1985

Requires the sponsor of a proposed legislative measure that mandates health insurance coverage to prepare and include a report that assesses both the social and financial effects of the measure.

Pennsylvania

1987, reauthorized 1993

Requires the Health Care Cost Containment Council to review proposed mandated health benefits when requested by the Secretary of Health or appropriate Senate or House committee chairmen.

Rhode Island

1999

Established a Senate commission to study a process for conducting an independent review of mandated health benefits.

South Carolina

2002

Establishes the Task Force to Review State and Federal Health Insurance Mandates. The task force is required to review each state and federally enacted mandated benefit place upon insurers in South Carolina since 1990. A final report must be submitted to the General Assembly by Jan. 1, 2005. Once the final report is submitted, the task force is dissolved.

Tennessee

1989

Indicates that impact notes must be provided for all bills that mandate health insurance coverage.

Texas

2001

HB 1610 directs the insurance commissioner to require a health insurance issuer to collect and report on cost and utilization data for each mandated benefit designated by the commissioner.

Virginia

1990, amended 1997

Establishes a Special Advisory Commission on Mandated Health Insurance Benefits within the executive branch. The commission is responsible for advising the governor and the General Assembly on the social and financial impact of current and proposed mandated benefits. Whenever a legislative measure containing a mandated health benefit is proposed, the standing committee having jurisdiction of the proposal will request that the commission prepare a study that assesses the social and financial impact and the medical efficacy of the proposed mandate. The commission has two years to complete its assessment.

Washington

1989, amended in 1997

Requires every person or organization that seeks to establish a mandated benefit to submit a report that assess the social and financial, as well as the medical efficacy, of the benefit at least 90 days prior to a regular session to the appropriate committee of the Legislature.

Wisconsin

1987

Requires the insurance commissioner to submit a report on the social and financial impact of any health insurance mandate contained in any bill to the presiding officer of the house of the legislature in which the bill is introduced.

Bare-Bones or Stripped Down Policies

Because strong concern exists in many states that the number of mandates required affects an individual's and small employer's ability to purchase health insurance coverage, state policymakers are resurfacing measures that were considered a decade ago. Legislators are returning to "bare-bones" legislation to combat the double-digit premium increases, especially in the small employer market. However, proponents of these bills face very strong opposition. Although supporters of bare-bones legislation believe that stripping away mandated benefit requirements will help lower health insurance premiums, opponents believe that, in the end, these policies will not offer the necessary coverage individuals need.

Recently, several states introduced bills that allow insurers to sell "bare-bone" or "stripped-down" health insurance policies—policies that do not include coverage for all state-required mandated health benefits. In 2001, the Arkansas Health Insurance Consumer Choice Act was enacted. The act (House Bill 1632) permits insurers to provide, as an option, an individual or group benefit plan that does not provide coverage for some or all of the state mandated health benefits.

North Dakota House Bill 1226, also enacted in 2001, allows insurers to sell basic health insurance policies, in both the individual and group markets, that do not provide coverage for the following state mandated benefits: off-label drugs, group coverage of substance abuse, mammograms, temporomandibular joint or craniomandibular disorders, prostate specific antigen tests, foods and food products used to treat inherited metabolic diseases, dental anesthesia and hospitalization, pre-hospital emergency services, and optometric services. Coverage for these mandated benefits may be obtained on an optional basis; however, the insurer may charge an additional premium for each benefit provided.

Table 4 highlights "bare-bones" legislation proposed in 2003. Legislation was enacted in Arkansas and Colorado.

Table 4: 2003 "Bare-Bones" Legislative Activity

Bill

Status

Requirement

Arkansas HB 1344

Enacted — 4/15/03

Amends the 2001 Arkansas Health Insurance Consumer Choice Act.

Colorado HB 1164

Enacted — 5/20/03

Permits small employers to purchase "basic health benefit plans" that exclude coverage for the following state mandated requirements: low-dose mammography, mental illness, hospice care, alcoholism, prostate cancer screening, and general anesthesia for dental procedures for children.

Georgia

SB 50 &
HB 806

General Assembly Adjourned

Established the "Georgia Consumer Choice of Benefits Health Insurance Plan Act". Permits insurers to offer both individual and group health benefit policies that, in whole or in part, do not provide coverage for the state-required mandated benefits.

Illinois

SB 908

General Assembly Adjourned

Permits individual and group health insurance carriers to sell "health flex plans" that, in whole or in part, do not provide coverage for the state-required mandated benefits.

Kentucky

HB 399

General Assembly Adjourned

Permits small group insurers to offer "limited health benefit plans" that exclude, in whole or in part, coverage for state-required mandated benefits.

Missouri HB 193

General Assembly Adjourned

Amends the existing "Limited Mandate Health Insurance Act." This bill strips away current coverage requirements of "limited mandate health insurance policies and contracts."

Montana

HB 688

Legislature Adjourned

Permits health insurance carriers to sell a "limited-benefit policy" that is not subject to state mandated health benefits.

Oklahoma

HB 1152

Legislature Adjourned

Established the "Oklahoma Health Insurance Consumer Choice Act." Permits insurers to offer individual health benefit policies that, in whole or in part, do not provide coverage for the state-required mandated benefits.

Texas

SB 541

To Governor

Establishes the "Texas Consumer Choice of Benefits Health Insurance Plan Act." Permits individual and group health insurance carriers to offer standard health benefit plans that, in whole or in part, are not subject to state mandated health benefits.

Texas

HB 1267

Passed House

Amends existing law by indicating that a "basic coverage benefit plan" or a "catastrophic care benefit plan" may exclude coverage of any state mandated health benefit.

Quasi-Bare-Bones Legislation

In January 2002, New Jersey Senate Bill 13 was signed into law, authorizing health insurance carriers to sell an alternative, lower cost policy to state residents. In 1992, the state reformed the individual and small employer health insurance market with the creation of the Individual Health Coverage Program (IHC) and the Small Employer Health Benefits Program (SEH) that allowed carriers to sell five different standardized, guaranteed-access, open-enrolled health benefit plans. Under Senate Bill 13, carriers now can sell a plan that provides individuals (not small employers) with another option that provides similar benefits to those covered by the standardized plans—as well as new coverage benefits—as highlighted below in Table 5.

Table 5: New Jersey SB 13 Individual Plan Option

Existing benefits

Existing benefits

With changes

New benefits

Physician's fees connected with outpatient and ambulatory surgery

Anesthesia and the administration of anesthesia

Coverage for newborns

Treatment for complications of pregnancy

Intravenous solutions, blood and blood plasma

Oxygen and the administration of oxygen

Radiation and x-ray therapy

Inpatient physical therapy and hydrotherapy.

Dialysis—inpatient or outpatient

Inpatient diagnostic tests and $500 annual aggregate (the bill adds per covered person) or out-of-hospital diagnostic tests

Laboratory fees for treatment in hospital

Delivery room fees

Operating room fees

Special (changed from intensive) care unit

Treatment room fee

Pharmaceuticals dispensed in hospital

Dressings

Splints

90 days hospital room and board — Amends the benefit by requiring policyholders to pay a $500 co-payment (formerly a deductible) per hospital stay.

Outpatient and ambulatory surgery — Amends the benefit by requiring policyholders to pay a $250 co-payment per surgery

Coverage for outpatient physical therapy — Indicates that benefits will be provided for 30 visits annually per covered person and that the policyholder will pay a $20 co-payment per outpatient physical treatment.

Emergency room services for medically necessary treatment — Amends the benefit by requiring policyholders to pay a $100 co-payment per visit.

Alcohol and substance abuse treatment— Clarifies that the benefits are for 30 days inpatient or outpatient with a 30 percent coinsurance.

Wellness benefit—Clarifies coverage by indicating that benefits are for $600 annual aggregate per covered person, and that the policyholder will continue to pay a $50 annual deductible and 20 percent coinsurance per service.

Physician visits for diagnosed illness or injury — Clarifies coverage by indicating that the policyholder will pay a $700 annual aggregate per covered person.

Coverage for physician's fees connected with outpatient and ambulatory surgery.

Coverage for biologically-based mental illnesses for 90 days inpatient with a $500 co-payment per inpatient stay and 30 days outpatient with a 30 percent coinsurance — Removes coverage for treatment of nervous and mental conditions.

Coverage for childhood and adult immunizations.

Florida Senate Bill 46e, enacted in May 2002, established a pilot program that allows insurers to offer a "health flex plan" for eligible participants residing in areas of the state that have the highest levels of uninsured residents. A health flex plan may limit or exclude benefits that otherwise are required by law for insurers that offer coverage in this state, may cap the total amount of claims paid per year per enrollee, may limit the number of enrollees, or may take any combination of these actions.

Utah House Bill 122, enacted in 2002, permits an insurance carrier to offer less or different coverage than the basic benefit package, the minimum standards required by the commissioner of insurance, or any other health insurance mandate required by state law when the Department of Health offers similar coverage as part of a Medicaid waiver.

Other Action

In 1999, Kansas enacted legislation that requires any mandated benefit measure to be solely applicable to the state employee plan for a period of one year upon its approval. After the one-year period, the Kansas State Employees Health Care Commission is required to submit a report indicating the effect of the mandated benefit on the state health care benefits program. The report also must include a recommendation as to whether the mandated benefit should continue or whether additional utilization and cost data are required. In 1990, Kansas enacted a measure requiring that a financial report accompany proposed mandated benefit legislation.

In 2001, North Carolina House Bill 1048 was signed into law, halting further action on mandated benefit requirements until July 1, 2005. North Carolina legislators froze further action on mandated benefit legislation in hopes that additional state mandates would not add to escalating premium costs.

North Dakota Senate Bill 2029, enacted in April 2003, amended existing statutes by indicating that a mandated benefit bill may not be acted on unless the measure provides the following:

● The mandated benefit will sunset on June 30 of the next odd-numbered year following the year in which the bill was enacted;

● The mandate is limited to the public employee health insurance program and the public employee retiree health insurance program; and

● For the next legislative assembly, the public employee retirement system shall prepare and request introduction of a bill to repeal the expiration date and to extend the mandated coverage to accident and health insurance policies. The public employees retirement system shall submit a report regarding the effect of the mandated coverage or payment on the system's health insurance programs. The report must include information about utilization and costs and recommend whether the coverage should continue.

PUBLIC COMMENT

We asked Keith Stover of Robinson & Cole, a law firm that represents the insurance industry, Jan Speagle, Government Affairs Counsel with the Connecticut Business and Industry Association (CBIA), and Gretchen Vivier, Director of Health Care for All at the Connecticut Citizens Action Group their opinions regarding mandated benefits. A summary of their comments follows below.

Robinson & Cole

Robinson & Cole noted that Connecticut has a wide-range of mandates that have been enacted over the last several years. Given the direct correlation between rising health care costs and mandated benefits, it recommends that the General Assembly reconsider the below list of mandates. A copy of Robinson & Cole's full response is enclosed.

1. Birth to Three Early Intervention Services, CGS 38a-516a

2. Health and Welfare Fee Assessment, SB 2001 (2003)

3. Dental Coverage, CGS 38-517a (PA 03-58, 2)

4. Protein Modified Food and Formula for Children up to 3, CGS 38a-518c

5. Prescription Drugs Removed from Formulary, CGS 38a-518f

6. Lyme Disease Treatment, CGS 38a-518h

7. Pain Management, CGS 38a-518i

Connecticut Business and Industry Association (CBIA)

CBIA raised the below listed objections to mandated benefits. A copy of its full response is enclosed.

1. Mandates can result in inappropriate medicine, diminishing the quality of health care for those who purchase health insurance in Connecticut. For example, CGS 38a-518h, Lyme disease treatment, and CGS 38a-530, mammography.

2. Health insurance mandates drive up health care costs by increasing provider charges. For example, provider mandates such as CGS 38a-514, 518i, 524, and 526.

3. Some mandates require health insurance policies to cover non-medical services. The result is higher health insurance cost without increased health care. For example, CGS 38a-516a (as amended), birth to three early intervention services, CGS 38a-518c, protein modified food and formula, CGS 38a-517a, dental coverage.

4. Some mandates simply shift the costs of social programs onto health insurance policies, further driving up their costs. For example, SB 2001 (June 2003, Special Session) 6(b), health and welfare fee.

5. Some mandates are inconsistent with similar federal mandates, creating confusion and increasing the costs of compliance. For example, CGS 38a-554, continuation of coverage.

Connecticut Citizens Action Group (CCAG)

CCAG believes that comprehensive health care should be available to all Connecticut residents. No health insurance policy should be sold without certain basic benefits. When mandates are required to reach that goal, CCAG is in support of them. CCAG believes that any extra costs due to mandated benefits are more than offset by the increased health and productivity of state residents.

JB/SB:ro