States Feel Less Inclined To Issue Coverage Mandates

Wal-Mart laws aside, many factors converge to steer legislatures away from being too intrusive

Back in 2003, when the number crunchers at PricewaterhouseCoopers did the math on health premiums, they fingered dozens of new state insurance mandates as contributing to a painful 13.7 percent spike in premiums. This year, when PwC went back to its calculators, the figure — 8.8 percent — still exceeded the country’s inflation rate, but it was not so exceptional when PwC factored in inflation trends for technology and defensive medicine.

And those state mandates?

After running at a hectic pace of more than 80 new mandates a year for three straight years, the industry had clocked four straight years where the demands had dropped by about half, PwC said in a report commissioned by America’s Health Insurance Plans, a longtime opponent of mandates.

“Mandates have slowed down considerably beginning in 2002, which means that state legislatures are just not passing as many of them,” says PwC’s Jack Rodgers, who saw a possible correlation between the slide in mandates and the return of single-digit premium inflation. “Perhaps they’ve slowed down because legislatures themselves decided they did not want to further increase health premiums.”

Perhaps. But some observers say you should approach any new analysis of mandates with a careful regard for conflicting causes.

Richard Cauchi, health policy specialist for the National Conference of State Legislatures (NCSL), says there’s no doubt that new mandates are coming through at a reduced pace, but you have to weigh how much that has to do with fears of health care inflation against a sense that many lawmakers feel their job is done.

“To talk about how many mandates were enacted in 2004 or ’05 is not the whole picture,” says Cauchi. “Once the state has established a law, they may feel ‘all right, we’ve done it.'” And that would make them unlikely to turn up the heat any more. But don’t rule out inflation phobia.

“Certainly there was a somewhat direct relation between the economic downturn [of 2001], where state budgets were in the red or even in crisis, and at the same time health premiums were going up more than they had in previous years,” adds Cauchi. “The combination put an additional damper on the idea of mandates.”

“Lite laws”

Between those two considerations, he says, some states ended up passing “mandate-lite” laws that permitted insurers to offer policies stripped of some or all mandates for the small businesses and individuals they wanted back in the market. Meanwhile, an NCSL report produced last year noted that despite the slowdown, there were discussions of new insurance provisions, particularly for cancer screening, in a fair number of legislatures

The long-running argument between the “for” and “against” groups has followed a similar pattern: Advocates say they’re making sure that unsophisticated businesses are getting the protection their workers need to have built into every policy and point to studies that say there’s no link between mandates and higher premium costs.

Opponents vehemently respond that mandates drive costs up unnecessarily, pricing people out of the market and leaving them with nothing. And aside from PricewaterhouseCoopers’ own work here, at least one report from the National Center for Policy Analysis estimates that 1 in 4 of the uninsured are being left in the cold by mandate-driven premium hikes.

Both sides have also been a lot more willing recently to put mandate proposals on the back burner, turning them over to study committees to determine exactly what the impact would be — both on premiums and the uninsured.

Little room for debate

A longtime mandate critic suggests that one reason for the more cautious approach to new provisions is that legislatures have already covered the human body with mandates, leaving little room for the debate to continue.

“I think they’re running out of subject matter,” says Neil Trautwein, health care lobbyist for the National Association of Manufacturers. NAM and other groups, though, have a whole new front opening up in the war over insurance mandates, one that is gaining traction with lawmakers all over the country.

When Maryland’s legislature recently ran over a governor’s veto to put in place the so-called Wal-Mart bill, which requires the giant retailer to spend at least 8 percent of total employee compensation on workers’ health benefits, retailers howled at the notion that major companies should be forced to cover health care benefits. New York’s Suffolk County has passed a similar bill and labor groups — eager to follow up on what they see as a winning issue — have been calling for similar legislation around the country.

In mid-February, a group of lawmakers in Georgia introduced its own Fair Share Health Care Act that is closely modeled on Maryland’s new statute.

And legislators in Colorado, Kentucky, and Connecticut have recently signed on to the “fair share” campaign as well.

The WakeUpWalMart campaign — which has been an outspoken critic of the retail behemoth — plans to roll out campaigns for similar laws in 30 states. And other big companies with deep ranks of employees have been caught up in the dispute. Employers are on high alert.

“Even though NAM doesn’t lobby on the state level, we see a 30-plus state campaign and know that the target is the ERISA law, the rock on which employer care is built,” says Trautwein. The AFL-CIO, the Service Employees International Union, and Families USA are “trying to make an end run through the states toward national health care. From our standpoint, there isn’t a business in the country which should feel secure in this rush to national care.”

Other mandate discussions drag on for years without any resolution. Case in point: the debate over a federal mental health parity law. In Congress, parity backers have the votes, but opponents can count on House leaders to bottle it up at the end.

“We’ve been trying to get out of this endless trench warfare that happens year after year,” says Trautwein, where Congress extends the ’96 law and buttons up the new measure in committee, letting the issue come back next year. This year, Trautwein says he’s hoping that all parties can compromise. And he also hopes that the reason Senators Ted Kennedy and Pete Domenici haven’t introduced the Senate version of the bill yet is that they want a final resolution as well.

“We’re not stonewalling,” says Trautwein. “We’re trying to deal with this issue and get this off Congress’s agenda. It’s been going on for quite a while. And we’ve always talked to the advocates, encouraged them to fix the greater oddities of their bill.”

“At an impasse”

“There are discussions to try and reach some consensus and agreement before the bill is introduced,” confirms Ron Honberg, legal director of the National Alliance on Mental Illness, “so we don’t just continue to beat our heads against the wall. We’ve really been at an impasse for several years.” The question for NAMI, though, is whether the employers’ efforts to remove the bill’s “greater oddities” effectively guts the law of any real benefit for the mentally ill. “A compromise that sounds good on paper but doesn’t help people won’t be acceptable to NAMI,” says Honberg.

The PricewaterhouseCoopers numbers indicate that while there may be less to fight over when it comes to new mandate initiatives, there’s still plenty of flak in the air.