- Overall, mandated coverage areas account for 12.8%-14% of health insurance premiums
- Changing state law would not affect at least half of the mandates
- areas covered by federal law
- areas health insurers would cover any way
- obsolete treatments
- 6 areas account for most of mandated costs
- maternity care
- mental health
- home health
- preventive care for children
- infertility services
- hearing aids
- Of these 6 areas, 3 would be unaffected by state action
- Repeal of the other 3 would result in significantly less than 5% savings
- Therefore, repealing mandated coverage areas is far from a fiscal panacea and other ways of controlling health care costs should be explored.
Controlling healthcare costs is a hot topic these days. One issue that is being debated is whether changing mandated areas of coverage is one way in which savings can be found (see for example http://www.mackinac.org/14080 regarding the issue in Michigan and comments on this website). Would changing the mandated coverage areas in Massachusetts actually have a significant impact on healthcare costs? Although the data clearly exist to answer this question, the answer is not completely easy to see.
When Massachusetts mandated “universal” health coverage in 2006, the law required that there be a review of the financial impact of all mandated coverage areas before any new ones could be enacted. That report was issued in 2008 by the Division of Healthcare Finance and Policy; it relies on data from 2004-2005 and is available at http://www.mass.gov/Eeohhs2/docs/dhcfp/r/pubs/mandates/comp_rev_mand_benefits.pdf. At that time, Massachusetts had 26 mandated coverage areas. Since the publication of that report, mandates for two new areas have been enacted, two have been expanded and a variety of others have been discussed. Reports on all of these are available on the Division’s website at http://www.mass.gov/?pageID=eohhs2agencylanding&L=4&L0=Home&L1=Government&L2=Departments+and+Divisions&L3=Division+of+Health+Care+Finance+%26+Policy&sid=Eeohhs2. In the 2008 report, the 26 mandated areas of coverage are estimated to account for 12% of the cost of premiums. With the more recent enactments, that number stands between 12.8% and 14%.
The report divides the mandates into two types: 1) those where changes in state law might well affect healthcare cost and 2) those where changes to the state law would be expected to have little or no impact on healthcare costs. This second group is made up of areas covered by federal mandates, where removal of the state mandate is irrelevant, areas that would be covered by insurers even in the absence of a mandate due to either their cost-effectiveness for the insurer or consumer demand, and those areas in which spending is so low as to be essentially non-existent (this is due mainly to mandates for obsolete treatments-see below).
Of the 12% of premiums estimated to be due to mandated areas in 2008, 80% of that cost, or 10% of premiums, was due to five areas: maternity, mental health, home health, preventive care for children, and infertility services. These areas still represent the lion’s share of the cost of mandated areas. Of these, two areas, maternity care and preventive care for children, in 2008 fell in the second category, where action by the state is expected to have no impact on costs. Mental healthcare has since moved into that category (see below).
The single largest mandated coverage area is maternity care, representing 3.73% of premiums. As it is required by federal law (http://www.insurance.wa.gov/publications/health/2105-Mandates.pdf beginning on page 5 provides a list of federally mandated areas), and also heavily demanded by consumers, removal of the state mandate would have no effect on insurance offerings and therefore no effect on cost.
The second largest area is mental health, which in the 2008 report represented 2.21% of benefits. In 2008, both the Commonwealth of Massachusetts and the federal government passed mental health parity acts, which increased the coverage in this area, raising it to 2.22-2.5% of premiums (http://www.mass.gov/Eeohhs2/docs/dhcfp/r/pubs/mandates/mental_health_parity_report.pdf). Since the federal government passed a similar bill, it is now the case that the Massachusetts mandate no longer has any impact on cost, as insurers are required to provide this coverage by federal law. The enactment of Massachusetts law regarding so called “collateral” services in children’s mental health is expected to have a negligible impact on costs (http://www.mass.gov/Eeohhs2/docs/dhcfp/r/pubs/mandates/childrens_mh_mand_ben_review.pdf).
The third largest area is home healthcare, representing 1.93% of premiums. No changes have been enacted in this mandate since the 2008 report, so this is probably still a reasonable estimate of its cost.
In fourth place is preventive care for children at 1.12% of premiums. As mentioned above state action in this area is expected to have no impact on costs.
The last of the top five is infertility treatment. In 2008, this area was estimated to be responsible for 0.89% of premiums. Recently, the infertility mandate has been extended to bring it in line with medical recommendations. This is expected to add between 0.04% and 0.31% of premiums, raising the total to between 0.93% and 1.2% of premiums (http://www.mass.gov/Eeohhs2/docs/dhcfp/r/pubs/09/Infertility_Report.pdf).
Since the 2008 report, two new mandates have been enacted, insurance coverage for autism treatment and for hearing aids. The addition of the requirement for autism treatment is expected to add between 0.24 and 0.49% of premiums. It is expected to also lower some state costs in other areas as health insurers pick up coverage (http://www.mass.gov/Eeohhs2/docs/dhcfp/r/pubs/10/mb_autism.pdf). Coverage of hearing aids is expected to add between 0.32% and 1.29% of premiums (note that this mandate does not affect those on Medicare, which does not cover hearing aids, and therefore will be primarily applicable to those under 65) (http://www.mass.gov/Eeohhs2/docs/dhcfp/r/pubs/10/mb_hearing_aids.pdf). Other new mandates have been proposed, but thus far have not been passed.
These data suggest that if the Commonwealth were to repeal all of the most costly mandates for which such repeal would have an effect, we would be repealing the mandates for infertility and home healthcare as well as the newly enacted hearing aid legislation. This would result in a maximum savings of 4.42% of premiums.
There are many arguments for and against the mandates on non-fiscal grounds, which I will not discuss here. It should be noted, however, that the true savings of repealing the home healthcare mandate and the hearing aid mandate are probably less than might be expected. In the case of the home healthcare mandate, repeal might cause care to take place in a more expensive care environment (this fact may well mean that insurers would continue to cover home healthcare even in the absence of a mandate). For hearing aids, there is expected to be savings further down the line, as those who can more readily receive hearing aids need fewer services for speech and mental health issues. Thus the 4.42% maximum savings is likely a large overestimation of the actual potential savings.
Although in the effort to contain rampant healthcare cost increases, it is important to consider every option, the data show that repeal of mandates is not the panacea that some suppose. This does not mean that a watchful eye should not be kept on mandates. So long as we continue to propose and pass new ones, the amount of spending attributable to them will rise, albeit slowly. In addition, as treatment costs change, the estimates we have now will no longer be valid. It would therefore be wise to require a periodic review of the entire mandate picture rather than solely of newly proposed legislation.
In addition, several mandates (notably the autism one) are very specific about the treatments they cover. If at some point, these treatments are no longer the ones of choice, these mandates will be obsolete. This is the case, for example, with the mandate for bone marrow transplants for breast cancer (see for example http://content.healthaffairs.org/content/20/1/207.full). These mandates will remain on the books, causing health insurers to continue to offer coverage for treatments that no one actually needs and coverage of the newer more up-to-date treatment will not be covered by the existing mandate. While the effect on cost of obsolete mandates is negligible, a periodic review of the medical efficacy of existing mandates (a review which is required of newly proposed ones) might well be sensible.
Mandated coverage areas do increase the cost of healthcare. The amount of the increase, however, is quite small, and clearly less than 5%. Although periodic review of mandates is sensible for many reasons, repeal of mandates for fiscal reasons is not the solution for rising healthcare costs. It is, at best, a tiny drop in the bucket.
Abigail, in an earlier post I offered the repeal of the MA infertility services mandate (among other suggestions) as a potential source for cost savings. I would agree its repeal would hardly be a “panacea” for health cost containment. Still, it would be a good start. Aside from their costs, such subsidies further compromise an already untenable health insurance system. Let us not forget it is health insurance we are discussing. One wonders…when exactly did health insurance become a method for prepaying medical services such as infertility treatment? Health insurance used to be used as protection against catastrophic events. Our current system can hardly be called insurance and does little to increase incentives to economize on the consumption of medical services. Only by reintroducing market forces will we see substantial cost reductions in health care costs. Eliminating mandates helps restore market forces and will in turn reduce premium costs.
There’s nothing like a recession to remind us that by definition resources are limited. Our elected leaders need to stop their customary practice of shifting costs and focus on helping to reduce costs-even if only by 5%. The cost of infertility treatment ($96 million annually) should be borne by those receiving the services. This mandate should be repealed. Spencer
As I said in my post, there are many non-fiscal arguments for and against the various mandates, including the infertility one. Strictly from a dollars and sense perspective, however, as my post makes clear, repeal of the infertility mandate would result in between a 0.93% and 1.2% savings on premiums. Given the rate at which our premiums rise very year, we would be unlikely to even notice such a small difference.
It is the group of, if you will repealable, mandates that add up to something less than 5%, not the infertility one alone.
If we are to repeal the infertility mandate, the argument needs to be made on grounds other than fiscal ones.
I’m sorry, am I missing something?
– maternity care
– mental health
– home health
– preventive care for children
– infertility services
– hearing aids
One of these things seems to be “not like the others”. One of these things “just doesn’t belong”. Yep, it’s the “infertility services” (In my opinion). While infertility may be a medical condition, it does not affect the health of insureds in the same way that they other items do.
If we include “aspirational healthcare” in our mandates, why not include elective (non-reconstructional) plastic surgery, breast augmentation, nose-jobs? While I can agree that a 1% savings is not much, it is still significant. I would completely agree with Spencer – that item should never have been included in mandated coverage and the costs should be allocated primarily to the participants in such procedures.
I’m all for fiscal responsibility in insurance (I know, sounds like an oxymoron), but the true value of any investment needs to be viewed over the long term. It’s interesting that we don’t typically include such procedures as gastric bypass or stomach banding either, and yet, these procedures would, effectively, create a healthier population, thus reduce healthcare costs over the long haul. Similar to maternity care and child-preventative medicine, obesity treatment it may have a high “up-front” cost, but the payback in terms of healthier program participants seems worth the price.
Abigail argues that repeal of any mandates is a “drop in the bucket”. But lots of little drops eventually end up making up the sum of the bucket. Eliminating the mandate for fertility services seems like a good idea, AND, it should be viewed within an overall framework targeted towards optimizing our investment in healthcare, resulting in a healthier population which will, over time, result in a much more effective investment.
If in your opinion “infertility care” is not like the others, then it is entirely reasonable to think it should be repealed. My point was that repealing it is not going to have a MAJOR effect on health care costs; in fact, the effect would probably be so small as to be barely, if at all, detectable. That does not necessarily mean that the mandate should stand; I simply am pointing out that repealing it SOLELY on fiscal grounds is not reasonable. If you or anyone else believes that infertility care is not a health item for which the state should require coverage, you are, of course, entitled to that opinion, but the facts show that cost should not be the primary motivating reason for that belief.
Abby – that’s a good point, but many pennies make a dollar. You have to draw the line somewhere. And to other posters who point out the emotional toll of infertility, I’m sure we’re all quite ready to acknowledge that point, but is it a public health issue?
Should an insurance company choose to cover infertility and spread the costs among it’s members, one has the option of taking one’s business elsewhere. The question here is NOT “should infertility coverage be available though insurance”, but “should the state mandate it as a part of public policy for a healthier society”?
Clearly, other mandates fall into this category. This one seems to cry out for review. To Abigail’s point, the review may reveal it to be not worthwhile given the small amount of savings, but all items should be “on the table” and a rational review of this topic could lead to a healthier society overall if funds were repurposed (for instance to obesity treatment) or to lower healthcare costs for all, except those who choose. For me, fertility treatment falls into the “elective surgery” category.
To be clear, I’m not making an argument here that fertility treatment should be targeted, but that it’s an example of an uninformed government mandate and that government mandates of this type should be subject to oversight. I too approve of the note Will posted in this regards. I would have hoped that the Insurers (whom I have no great love for) would also have a voice in the process.
Infertility is a medical condition, and it is agonizing and life-shattering for many who experience it. It is not a small matter, and for those without insurance coverage, it frequently becomes a life-long sentence. Like any medical treatment, it is appropriate to provide treatment to medically suitable patients.
Please see this link for more information:
As a former infertility patient I am with you on this one, and thanks so much for the link to Resolve–a truly wonderful organization and resource.
I did not mention this aspect of the infertility mandate debate as I wanted to focus on the fiscal issues.
As someone who suffers from infertility, I just want to chime in and suggest that it actually is a health problem, one that is chronic and heartbreaking as much as many other medically “acceptable” conditions are chronic and heartbreaking. Often disease is the root cause of infertility, structural issues like endometriosis and fibroids, hormonal issues like PCOS, etc. Procedures are needed to help with reproductive function.
It is actually insulting to compare it to something cosmetic/”aspirational.” It is aspirational inasmuch as normal sexual function is aspirational. Unfortunately anything related to infertility has been compromised by the images of people like the Octomom. The reality is far different. A woman who has had repeated miscarriages or given birth to a stillborn child requires testing to find out why her body is rejecting a fetus: that is an infertility service. A woman whose fallopian tubes have been infected by PID or destroyed by an ectopic pregnancy and whose eggs/embryos must now physically be placed in her uterus in order to conceive: that is an infertility service. It is not a drive-up window for any and all who choose it. Protections are in place for abuse of the system (age limits, “lost” causes, covered number of attempts for each fertility procedure.) While some investigation of these protections might be warranted, I think the elimination of the mandate entirely would be an injustice.
Just to set the record straight regarding “octomom,” in addition to the fact that her care was well outside the bounds of medical standards, she paid for her IVF treatments out of her own pocket. She was, at least at the time of her pregnancies, not covered by private insurance; she was insured by the medicaid system in California, which does not cover IVF (public systems are exempt from mandates any way). Not covering treatment for infertility had no effect at all on the public picking up the tab for the high risk octuple pregnancy.
Equating infertility with cosmetic procedures is not only insulting, it is mis-guided. Yes, both are elective. Technically so is hip replacement, prosthetic limbs and some heart procedures. You don’t HAVE to have them. Our health insurance system is designed to cover a wide variety of areas, many of which are not life-threatening. Our legislature has decided that we, in Massachusetts, ought to cover infertility treatment. Those who disagree need to be aware, as I outlined in my original comment, that the amounts of money, on a per premium basis, that we are talking about are small and that, while one certainly may oppose insurance coverage for infertility treatment on a wide variety of grounds, to do so as a cornerstone of a plan to control health care costs, is not in line with the facts.
I’ve recently been asked to cosponsor a bill to mandate coverage of hearing aids, receiving this note from a constituent:
“Representative Scibak has proposed two hearing aid bills; An Act to Provide Coverage for Hearing Aids and An Act to Provide a Hearing Aid Tax Credit. The first bill requires all private health insurer to cover the full cost of attaining one hearing
aid per hearing impaired ear every 36 months, while the second bill allows a taxpayer (55 years or older) who purchases a hearing aid to receive a tax credit up $500.
Currently, only 23% of individuals with hearing loss use hearing aids. The reason why 77% of people with hearing loss go untreated is that, for millions, treatment is financially impossible. 71% of hearing aid purchases do not involve a 3rd party
payment, placing the full burden of cost on the consumer.
Please support the passage of these two bills.”
Although I am ambivalent about any additional mandates, I will cosponsor the mandate for discussion purposes. I will not cosponsor the tax credit — I’m opposed to special purpose tax credits as a generalization; we should be moving away from them not towards them.
this is very interesting. I suppose this is because the current mandate for hearing aids does not apply to medicaid? How is this bill different from the recently passed one?
Will, thanks for illustrating how government has run amuck. Here we are discussing controlling health care costs and you segue into cosponsoring a bill for free hearing aids every 3 years…this is really the definition of madness.
I look forward to the “Free Hearing Aid” TV commercials…they should run them next to the Scooter Store ads…come on down!
Sort of a fair shot.
But it’s not government costs, in this case, it’s health care costs.
And it’s not free either — the user will pay a substantial copay.
The state mandates universal hearing screens in children before discarge from the hospital. This began in Rhode Island and I beleive all states mandate this. 1:1000 babies are born with hearing loss often requiring amplification for the development of normal speech and hearing. Some are profoundly deaf and cochlear implantation is recommended. The use of hearing aids in children is not trivial medically, academically and socially and also is quite expensive. This should absolutely be covered by insurance and not only be availabe to more financially well off families. The overall cost to society in a child with early amplification in terms of becoming a contributing citizen is far outweighed by the cost of hearing aids.
I suppose it may never be possible to have these conversations without one’s remarks being construed as insensitive or insulting. It would be my hope that those who may disagree with my point of view would do so without labeling me as uncaring or mean spirited. Nevertheless it is important we all recognize the elephant in the room. The health care system is broken and is in serious need of “real cost reform”. A system which fails to follow the precepts of supply, demand and predictable human behavior will never achieve cost efficiencies which will benefit all.
Re: Marginal cost of infertility treatment. Worth pointing out that even the study that Abigail cites references the difficulty in determining savings accurately. Given the information imparted in the various posts (including Abigail’s), I don’t suppose the cost really matters-it never does when somebody else is responsible for it. I’m not judging you. I’m a realist who happens to believe in the writings of Adam Smith & Milton Friedman. The Octomom is no aberration. She is simply following the “invisible hand” of self interest that Smith writes about. Just as we all do. (Until proven otherwise I still believe her treatments were subsidized whether the mechanism is a state mandate or Medicare)
I know the inability to conceive and the traumatic events surrounding it can be devastating. I sympathize but do not believe this sympathy can or should extend to funding via tax/health policy. What about those who choose to forego infertility treatments and adopt? Shall we apply same argument and compensate the adoptive parents? I believe Rich is correct. The condition of infertility is unfair but this mandate’s repeal is completely justified.
Just to clarify, as I have no desire to beat a dead horse, so to speak, “octomom” may not be an aberration, but her fertility treatments were funded by her personally, not medicare nor health insurance. Totally free market.
As an adoptive parent, i happen to believe that that decision needs to be made on a basis other than financial and many people must choose between pursuing infertility treatment and adopting on the basis of cost alone, sine adoption is really expensive, and they cannot afford to do both. One should adopt because one really wants to, not because one cannot afford fertility treatment.
A note: the health care bill that we passed last year includes the following language:
“(e) The division of health care finance and policy shall issue a comprehensive report at least once every 4 years on the cost and public health impact of all existing mandated benefits. In conjunction with this review, the division shall consult with the department of public health and the University of Massachusetts Medical School in a clinical review of all mandated benefits to ensure that all mandated benefits continue to conform to existing standards of care in terms of clinical appropriateness or evidence-based medicine. The division may file legislation that would amend or repeal existing mandated benefits that no longer meet these standards. “
This is excellent. Precisely what I would have suggested.
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