Bacon's Rebellion

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Mandating Health Benefits: A Current Case Study

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James A. Bacon
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The case seemed so compelling: Dr. Christopher S. Walsh, operator of a cancer-treatment clinic in rural Westmoreland County, pleaded with a legislative/citizen commission to require insurance companies to cover a novel radiation therapy known as solid compensator Intensity Modulated Radiation Treatment. He lined up expert witnesses to testify on his behalf and cancer survivors to tell how the treatment saved them.

But Anthem Blue Cross and Blue Shield, which dropped its coverage of the treatment earlier this year, claims that the advantages of the expensive procedure have not been clinically proven. “If IMRT eventually is not found to be the safest and most effective . . . we would be forced to pay for treatment that may not be safe and effective,” said Dr. Mae Ellen Terrebonne, vice president medical director for Anthem in Virginia.

According to Lawrence Latane with the Richmond Times-Dispatch, a report by the Joint Legislative Audit and Review Commission calculated that a full battery of treatments would cost about $16,500. That one set of procedures would be expensive enough to raise median monthly medical premiums by $1 per month if mandated by the state.

At one time, Virginia had more medical mandates than any almost every other state in the country — and it may still. The result was fantastic coverage for those who could afford the insurance — and no coverage at all for those who couldn’t. Small businesses who can’t afford to self-insure and exempt themselves from the mandates have little flexibility in the kind of insurance policies they offer. Mandates make it impossible, for instance, to offer bare-bones coverage that protects against catastrophic illnesses and allows patients the benefits of negotiated rates on routine expenses — which is certainly preferable to no coverage at all for those one million Virginians who lack it.

The decision of which procedures get covered should be left to the medical experts and the actuaries who design insurance policies for different market segments — not to the political process, where decisions can be manipulated by heart-wrenching anecdotes.

Gov. Timothy M. Kaine has made it a top priority to reduce the number of Virginians lacking health care — a truly worthy goal. Let us hope that he addresses the critical issue of mandated medical benefits.

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7 responses to “Mandating Health Benefits: A Current Case Study”

  1. Gold_h2o Avatar
    Gold_h2o

    Interesting post….

    “Small businesses who can’t afford to self-insure and exempt themselves from the mandates have little flexibility in the kind of insurance policies they offer. Mandates make it impossible, for instance, to offer bare-bones coverage that protects against catastrophic illnesses and allows patients the benefits of negotiated rates on routine expenses — which is certainly preferable to no coverage at all for those one million Virginians who lack it.”

    IMO, I think insurance companies (big ones anyway) like the fact that they can’t/don’t offer “a la carte” plans…it eliminates competition from smaller companies…in other words they prefer to sell a BMW-style package as opposed to a Ford-style package….it also forces people who need insurance into the private plans (which cost more) as opposed to big group plans which cost less.

    Also, as a side note, I think Massachusetts passed a law that REQUIRED all employers to offer health care….not sure how it’s working out but it might be worth investigating.

  2. Ray Hyde Avatar
    Ray Hyde

    The jury is still out on the Massachusttes plan. I think it requires everyone to have a health plan, not just the businesses. If you are not covered you must buy insurance, or pay a fee to the state, which then covers you.

    What this means is the insurance companies can no longer cherry pick the best health risks. In the end, everyone must be insured so the insurance companies will pick up the tab.

    Since every employer is required to have a plan, small businesses compete on an equal level: a small contractor cannot offer lower rates by not offering a plan to his employees. Since the group plans are always cheaper than the private plans or the state plan, employees always sign up for the company or group plan, and this lowers the cost.

    I don’t know what happens if you are indigent and jobless. I guess the state sticks you in their plan anyway, as part of your welfare benefits.

    Anyway, the jury is still out on this. The bill has been passed, but I’m not sure it is implemented yet, and anyway, it is too soon to see the results.

  3. Toomanytaxes Avatar
    Toomanytaxes

    Gold_H20 — Well stated. It might be a lot less expensive to develop a framework where small businesses could band together to provide affordable basic coverage to their employees and families. But that would entail basic coverage for the group. What’s better something or nothing?

  4. Gold_h2o Avatar
    Gold_h2o

    TMT-

    Insurance pools are a good idea and it’s something I think should be pursued…..any coverage is better than nothing.

    But, we could end up back where we started with any type of plan…..what services get covered and which ones don’t….and more importantly who chooses those services and why or why not?

    I guess the question ultimately becomes, would insurance companies offer “a la carte” plans if they were allowed to do so? I don’t know…I would think a la carte plans could backfire because people would always buy the cheapest plan…..then they would come down with a sickness that requires a service which is not covered….then they sue….then they go to trial by jury…then they win a few million bucks….then the insurance company has to raise rates…it’s a vicious cycle.

    The only a la carte portion of health care plans that is in play today is the deductible portion…if you want a higher deductible then you will get lower monthly rates and vice versa….at least on the open market.

    If you are part of a group plan you pay $X dollars per month and pay whatever the deductible is when you get sick….I am not sure how much flexibility exists within group plans as far as a deductible goes….perhaps you could allocate a few more dollars per month and get a lower deductible….I guess it depends on the plan your company chooses for it’s employees.

    It’s a complicated and crazy system.

  5. James Atticus Bowden Avatar
    James Atticus Bowden

    Agree that we need to look hard at regulation.

    And (broken record here) start individual health savings accounts for all Virginians – now.

  6. Larry Gross Avatar
    Larry Gross

    Health care, I believe, in it’s current form, actually has something to do with human settlement patterns and commuting.

    It’s often not the salary per se that drives where someone is employeed but it’s whether or not they can get health insurance.

    This is especially true of young families where it’s quie clear that they are only one major (expensive) illness away from being financially destroyed if they don’t have medical insurance.

    This means.. that the breadwinners will not accept a local job with minimal benefits and will, in fact, DRIVE to where they can get a “good” job.

    If every person in this country could buy affordable catastrophic insurance and have as JAB advocates an HSA for ordinary expenses – the choice of where to work might be guided by other factors – like is it closer to home or is it a job I like and want to make a career of and not be trapped… by the need for insurance…

    Some folks .. commute every day.. to a job they’d not stay at – to essentially keep their insurance.

    This is one of the major draws for the Federal Workforce. People know.. that they are guaranteed insurance no matter their personal circumstances whereas private companies, especially smaller ones, will not accept someone who has a family member with major health issues – because – they’ll lose insurance for all of their employees.

  7. Ray Hyde Avatar
    Ray Hyde

    That’s right. The only thing that is keeping me from semi-retiring and working full time on the farm is health insurance.

    If Cate Wyatt wnat to do something for the hallowed Ground project, maybe health care is part of the picture. You can’t save the ground without the people to do it.

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