HIAA Sees Continued Slowdown In State Mandated-Benefit Laws
In an era of rising health care costs and increasing numbers of uninsured Americans, state legislatures may be getting the message that mandating benefits harms the system, says an official with the Health Insurance Association of America.
Jeff Gabardi, senior vice president and general counsel with the Washington-based HIAA, says one of the most significant trends in state health insurance initiatives is the slowdown in state mandated-benefit laws.
Indeed, according to statistics compiled by HIAA as part of its 2003 State Legislative Forecast, states adopted only 46 new mandates in 2002.
This continues a steady decline dating back to 1999, when states enacted 103 mandates.
Gabardi tells National Underwriter the decline in state mandated-benefit laws indicates that state lawmakers are hearing the industrys message about mandates adding to the cost of insurance and the number of uninsureds.
While states may be serving a constituency by enacting a mandate, Gabardi says, for every 1% increase in the cost of health insurance some 200,000 people lose their coverage.
Over time, he says, the impact of mandates adds up.
Indeed, Gabardi says, states are starting to look at mandates in different ways. In some jurisdictions, he adds, discussions of mandates are moving from the legislative arena to advisory committees, where they can be considered away from the glare of politics.
While states are not considering repeal of existing mandates, he adds, it is important that they are slowing down enactment of new mandates.
Looking ahead to 2003, Gabardi says that medical malpractice and liability reform have taken center stage very quickly due to some well-publicized problems.
Indeed, he says, liability reform will be a top priority in at least three states: Pennsylvania, West Virginia and Texas.
Gabardi adds that states are considering and enacting liability reform despite the efforts of trial lawyers.
On the issue of privacy, Gabardi says California could be a bellwether regarding enactment of privacy provisions that go beyond those of the Gramm-Leach-Bliley Act and the Health Insurance Portability and Accountability Act of 1996.
Indeed, he says, the California Senate Bill S.B. 1 would create one of the toughest privacy standards in the country, going well beyond GLB.
It is also possible, Gabardi says, that privacy might be the subject of a ballot initiative in 2004.
He notes that because of the size of the California market, legislation there sometimes has national impact.
Many insurance companies, according to Gabardi, will make changes nationwide based on California legislation.
In its State Forecast 2003 report, HIAA identifies several other issues that are likely to emerge in state legislatures this year.
One is so-called “prompt payment of claims.” Provider groups, HIAA says, will advocate legislation that establishes more stringent standards and shorter time frames for payment of claims.
Moreover, the legislation will increase the penalties for late payment, HIAA says.
The typical penalties, according to HIAA, are higher interest rates, increased administrative penalties imposed by regulators and a private right of action to enforce the laws.
On prescription drugs, HIAA says at least two-thirds of the states will consider measures to rein in drug costs. These could include drug rebates and discounts, along with generic substitution measures, bulk purchasing arrangements and uniform prescription drug cards, HIAA says.
On single-payer systems, HIAA says there has been some talk about establishing state-based systems.
Gabardi notes that Oregon considered a single-payer system as part of a ballot initiative, but it was defeated by a substantial margin.
He says that one reason the initiative lost so badly was the fact it was so extensive that it would have required the state to double its budget in order to provide health insurance.
However, Gabardi says, he expects advocates of a single-payer system in Oregon to try again with a scaled-down proposal.
Moreover, he says, there has been some talk of a single-payer ballot initiative in California.
On long-term care, HIAA says that several states will likely consider legislation providing state tax incentives for the purchase of LTC coverage.
Some 23 states already have such incentives, according to HIAA.
At the same time, to control rate increases and educate consumers, HIAA says state regulators are likely to consider implementing the rate stabilization and consumer disclosure requirements in the Long-Term Care Insurance Model Regulation developed by the National Association of Insurance Commissioners, Kansas City, Mo.
Finally, HIAA says, there is the issue of “tier rating,” or reunderwriting, of individual health policies.
HIAA notes that tier rating became an issue in 2002 following news reports that insurance companies use health status as a rating factor at renewal.
A handful of states, HIAA says, will probably introduce legislation to prohibit tier rating.
Nonetheless, HIAA says, the expectation is that health insurance issues overall will be a lower priority in state legislatures than in previous years because of state fiscal problems.
There will still be pressure to address health insurance issues, HIAA says, but with dire state revenue forecasts, funding will be limited.
Reproduced from National Underwriter Edition, February 3, 2003. Copyright 2003 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.