While the national health reform law requires states to pay for health benefit mandates that exceed a minimum package of covered services, states’ financial liability for mandates is likely to be relatively small, according to a new Policy Analysis from the nonprofit, nonpartisan National Institute for Health Care Reform (NIHCR).
Written by researchers at the Center for Studying Health System Change (HSC), the policy analysis describes the range of current state benefit mandates and federal health reform law provisions that will affect state approaches to benefit mandates in nongroup and fully insured small-group health plans. The analysis also examines Maryland, a state with a wide array of benefit mandates, to illustrate how mandates interact with essential health benefits.
State health benefit mandates range from requirements that insurers cover prescription drugs to services of chiropractors to in vitro fertilization. The 2010 national health reform law requires states to pay for mandated benefits for certain insured people if the mandates exceed a minimum package of covered services, known as essential health benefits. Starting in 2014, almost all nongroup and fully insured small-group insurance products, including those sold through the new state insurance exchanges, must provide essential health benefits, which include 10 broad categories of services ranging from ambulatory care to hospitalization to prescription drugs.
“Federal guidance indicates states can define essential health benefits by selecting a benchmark from certain existing employer-sponsored health plans offered in a state. All of the benchmark plan options generally cover a wide range of benefits, including many state-mandated benefits. Federal guidance suggests that states can avoid mandate costs by choosing a benchmark option—for example a small-group plan—subject to state mandates. But, in some states, benefit mandates for nongroup plans—which are not a benchmark option—exceed mandates for small-group plans. States then must pay for mandates not included in the benchmark plan—according to the analysis.
Additionally, there are some state mandates that are not covered consistently by benchmark plans. For example, in vitro fertilization services for infertility and applied behavioral analysis therapy for autism are covered by some small-group plans but not typically included in other benchmark plan options.
However, even if states leave all mandates in place, their financial liability likely will be small, the analysis found. For example, almost all of Maryland’s mandates, which include in vitro fertilization, would be included as essential health benefits, regardless of which benchmark plan the state selects. Maryland’s liability for mandates in 2016 would range from about $10 million to $80 million—depending on the benchmark plan selected—if the state retained all mandates, according to the analysis.
The Policy Analysis—State Benefit Mandates and National Health Reform—was written by Chapin White, Ph.D., an HSC senior researcher; and Amanda E. Lechner, M.P.P., an HSC health policy analyst .