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Mandate-lite Plans: The Texas Experience Health Action 2009 January 30, 2009 Stacey Pogue, Policy Analyst

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Presentation on theme: "Mandate-lite Plans: The Texas Experience Health Action 2009 January 30, 2009 Stacey Pogue, Policy Analyst"— Presentation transcript:

1 Mandate-lite Plans: The Texas Experience Health Action 2009 January 30, 2009 Stacey Pogue, Policy Analyst

2 What the Industry Says Texas has 54 mandates Ranked 4 th in U.S. for most mandates Mandates increase costs 20-50% –Council for Affordable Health Insurance

3 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 dont 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

4 TDI Consumer Guide Benefit Fee for Service Plans RegularMandate-lite HIV, AIDS, or related infectionYesNo Chemical dependency treatmentYesNo Serious mental illnessOfferNo MammographyYes Emergency care (only stabilization) Yes, if PPO In vitro fertilizationOfferNo Complications of pregnancyYes Example minimum required benefits in small-employer health plans

5 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

6 Whats Left Out of Consumer Choice Plans? Taken Out Left In HIV/AIDSMammography Chemical dependency treatmentEmergency care (only stabilization) Crisis stabilization unit and residential treatment center for children Alzheimers (certain requirements if Alzheimers is covered) Inpatient mental healthPKU 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 injuryComplications of pregnancy Example: Texas Small Employer Plans

7 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

8 Costs and Benefits of Mandated Benefits Failure to offer the benefits would diminish a persons 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 TexasReport #2, 2000

9 Mandated Benefits Dont Cost Much Group Coverage Individual 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

10 Mandated Benefits Dont Cost Much (cont.) Most and Least Expensive Group 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

11 Removing Mandates Doesnt 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%)

12 Few Consumers Buy Mandate-lite Plans 2004200520062007 Number of Consumer Choice Plan Policies Issued Individual Policies4,289 31,67633,24043,344 Small Employer Group Policies670 2,5285,43810,595 Large Employer Group Policies1357150360 Total4,97234,26138,82854,299 Number of Lives Insured in Consumer Choice Plans Individual Policies7,38360,38652,72265,284 Small Employer Group Policies4,68914,97355,772141,781 Large Employer Group Policies5,37312,31621,60446,301 Total17,44587,675130,098253,366 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.

13 Mandate-lite Plans Do Little to Reduce the Uninsured 2004200520062007 Number of Policies Issued to Previously Uninsured Groups and/or Individuals Individual Policies4493,2331,336414 Small Employer Group Policies176325701915 Large Employer Group Policies00210 Total6253,5582,0581,329 Number of Lives Insured That Were Previously Uninsured Individual Policies2,4045,8862,056540 Small Employer Group Policies1,8791,4398,3546,955 Large Employer Group Policies004,0190 Total4,2837,32514,4297,495 200,000 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

14 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

15 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).

16 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

17 Use of This Presentation The Center for Public Policy Priorities encourages you to reproduce and distribute these slides, which were developed for use in making public presentations. If you reproduce these slides, please give appropriate credit to CPPP. The data presented here may become outdated. For the most recent information or to sign up for our free E-Mail Updates, visit © CPPP Center for Public Policy Priorities 900 Lydia Street Austin, TX 78702 P 512/320-0222 F 512/320-0227

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