Mandate-lite Plans: The Texas Experience Health Action 2009 January 30, 2009 Stacey Pogue, Policy...
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Transcript of Mandate-lite Plans: The Texas Experience Health Action 2009 January 30, 2009 Stacey Pogue, Policy...
Mandate-lite Plans: The Texas Experience
Health Action 2009January 30, 2009
Stacey Pogue, Policy [email protected]
What the Industry Says
• Texas has 54 mandates
• Ranked 4th in U.S. for most mandates
• Mandates increase costs 20-50%– Council for Affordable Health Insurance
Is Counting Mandates Important?• No simple answer on number
– Mandated offers (NOT the same as benefits)– Covered people. Ex: adopted children, college students– Covered providers. Ex: chiropractors, psychologists– If/Thens– Many don’t apply to all plans. Small business coverage
often excepted. Some apply only to HMOs.
• Get a list from state department of insurance• Texas small group plans:
– 14 mandated benefits– 5 mandated offers
• Texas individual plans:– 20 mandated benefits– 1 mandated offer
TDI Consumer Guide
BenefitFee for Service Plans
Regular Mandate-lite
HIV, AIDS, or related infection Yes No
Chemical dependency treatment
Yes No
Serious mental illness Offer No
Mammography Yes Yes
Emergency care (only stabilization)
Yes, if PPO Yes, if PPO
In vitro fertilization Offer No
Complications of pregnancy Yes Yes
Example minimum required benefits in small-employer health plans
“Consumer Choice” Plans
• Consumer Choice Plans = mandate-lite• All insurers may offer. Small group carriers
must offer• Insurers must still offer a regular plan• Notice and signed disclosure (from employer)• Purpose:
– Create more affordable coverage– Help more small businesses get coverage
What’s Left Out of Consumer Choice Plans?
Taken Out Left In
HIV/AIDS Mammography
Chemical dependency treatment Emergency care (only stabilization)
Crisis stabilization unit and residential treatment center for
children
Alzheimer’s (certain requirements if Alzheimer’s is covered)
Inpatient mental health PKU treatment (if Rx covered)
Contraceptives (if Rx covered) Maternity minimum stay (if maternity is covered)
Bone mass measurement for osteoporosis
Reconstructive surgery for mastectomy
Acquired brain injury Complications of pregnancy
Example: Texas Small Employer Plans
Texas Data on Mandated Benefits and Mandate-lite Plans
• Cost of mandated benefits (1998, 2000 studies; 1992-2006 annual reports)
• Utilization of mandated benefits• Number of CCPs issued and renewed• Number of CCPs issued to previously
uninsured• Plan savings from removing benefits• Insurers average premium for the most
popular CCP and regular plan
Costs and Benefits of Mandated Benefits
• Failure to offer the benefits would diminish a person’s health status in many cases.
• Removal has other social and economic impacts, ex: lost productivity, higher disability costs for employers.
• Lack of coverage for benefits would cause a financial burden on those who need treatment.
• If paid for out-of-pocket, related care would be lower quality and less cost-effective than if covered by group insurance.
• Eliminating mandates would have little impact on the number of uninsured.
• Insurers likely would offer the benefits even if they were not mandated (generally in self-funded plans).
– Cost Impact Study of Mandated Benefits in Texas—Report #2, 2000www.tdi.state.tx.us/reports/documents/benefits2_00.pdf
Mandated Benefits Don’t Cost MuchGroup
CoverageIndividual Coverage
Mandated benefit cost as a percentage of total claims paid 4.4% 3.6%
Mandated benefit cost as a percentage of total premiums earned 3.8% 3.3%
Average monthly premium for mandated benefits - single coverage $8.98 $5.12
Average monthly premium for mandated benefits - family coverage $22.59 $11.83
Data based on 20 (group) and 13 (individual) mandated benefits, October 2005-September 2006
www.tdi.state.tx.us/reports/life/documents/lhlmanbenrept06.pdf
Mandated Benefits Don’t Cost Much (con’t.)
Most and Least ExpensiveGroup Mandated Benefits
Monthly Premium Cost
Single Coverage
Family Coverage
Serious Mental Illness $1.20 $3.02
Childhood Immunizations $0.99 $2.71
Craniofacial Surgery for Children $0.04 $0.09
Nutritional Supplement for PKU $0.02 $0.05
Texas Department of Insurance, October 2005-September 2006
Removing Mandates Doesn’t Result In Big Savings
Consumer Choice Plan (CCP) experience:• Generally less than a 3% savings from
removing mandated benefits– BCBS of Texas – 1.25% savings– Aetna – .5% savings– United Healthcare – 2-2.5%
• Many mandated benefits still included• Savings primarily from increases in
deductibles, copays, and coinsurance (≈ 2% - 35%)
Few Consumers Buy Mandate-lite Plans 2004 2005 2006 2007
Number of Consumer Choice Plan Policies Issued
Individual Policies 4,289 31,676 33,240 43,344
Small Employer Group Policies 670 2,528 5,438 10,595
Large Employer Group Policies 13 57 150 360
Total 4,972 34,261 38,828 54,299
Number of Lives Insured in Consumer Choice PlansIndividual Policies 7,383 60,386 52,722 65,284
Small Employer Group Policies 4,689 14,973 55,772 141,781
Large Employer Group Policies 5,373 12,316 21,604 46,301
Total 17,445 87,675 130,098 253,366
• ≈14 million Texans have employer-sponsored or individual health insurance
• ≈6 million uninsured Texans
• Mandate-lite plans accounted for 6% of small employer lives covered in 2006; up to 12% in 2007.
Mandate-lite Plans Do Little to Reduce the Uninsured 2004 2005 2006 2007
Number of Policies Issued to Previously Uninsured Groups and/or Individuals
Individual Policies 449 3,233 1,336 414
Small Employer Group Policies 176 325 701 915
Large Employer Group Policies 0 0 21 0
Total 625 3,558 2,058 1,329
Number of Lives Insured That Were Previously Uninsured
Individual Policies 2,404 5,886 2,056 540
Small Employer Group Policies 1,879 1,439 8,354 6,955
Large Employer Group Policies 0 0 4,019 0
Total 4,283 7,325 14,429 7,495
• ≈200,000 small businesses do not offer coverage• ≈6 million uninsured in Texas• Only 7% of newly issued mandate-lite plans sold to previously uninsured in 2007- Most sold to insured
Mandate-lite Plans Have the Potential to Segment the Market
• 61,000 people in newly issued mandate-lite plans in the small group market in 2007
• 89% of them had previous coverage – substituting full coverage for limited benefits
• ≈ 5% of total small group market substituted coverage in 2007
• Insurers predict/see healthier people in mandate-lite plans– Unicare: 4-6% saving from healthier population– Imerica: 5-6% savings from healthier population– Republic American: 2.5% savings from healthier population
The Texas Experience• Mandated benefits account for a small percentage of
premiums (4%).• Removing mandates produces little savings (< 3%)• Savings comes from increased cost-sharing.• Many insurers are still including mandated benefits
(consumers want this coverage).• Few consumers/small employers are buying
mandate-lite plans.• Mandate-lite plans have not brought many uninsured
small businesses into the market.• Most consumers/employers with mandate-lite plans
have replaced existing coverage.• Mandate-lite plans could segment the market (cause
adverse selection).
Advocacy Strategy• Is something better than nothing – will the program
really cover people who are currently uninsured?• Texas strategy: get some mandates back in.
Mandate-lite vs mandate-free.• Ways to improve a bill:
– Exempt certain mandates. Ex: child-specific mandates – Notice/signed disclosure (at a minimum)– Do not require insurers to offer– Collect data on where savings come from– Collect data on impact to uninsured– Require study on effect to the rest of the market– Require study on costs and benefits of mandates
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