California Benefits Mandate Mania: 85,000 To Lose Health Insurance

California Benefits Mandate Mania: 85,000 To Lose Health Insurance

What is the point of passing a law that requires independent analyses of the costs of mandating which benefits health plans must cover, if the lawmakers are then free to ignore the results of the independent analyses?

The California Legislature is considering ten bills mandating benefits that will cost $2.7 billion in private premium increases and taxpayer funding for CalPERS (the public employees’ benefits fund) and MediCal (Medicaid) in the first year of coverage. The premium increases will add 3.6% to Californians’ health plan costs.

Disappointingly, Capitol Weekly, Sacramento’s political daily, reports these numbers as coming from the California Association of Health Plans (CAHP). But they don’t. The health plans’ trade association is simply promoting the results of independent analyses of the bills that the Legislature itself requires. The California Health Benefits Review Program (CHBRP) was established in 2002 as a result of a law (passed in an uncharacteristic fit of common sense) that required independent analysis of any health benefit mandate passed by the Legislature. CHBRP is run by the University of California system.

And CAHP quotes CHBRP conservatively. The “killer mandate” in the package of ten bills is AB 1774, which mandates gynecological cancer screening. CAHP’s “fact sheet” states that AB 1774 will cost $2.1 billion in increased private premiums and CalPERS and Medi-Cal costs. However, CHBRP also estimates that AB 1774 will also increase patients’ out-of-pocket costs by almost $1 billion, for a total increase of $3 billion.

Of course, CHBRP concludes that the mandate might have some benefits, which whittles the net cost down to $2.7 billion. Nevertheless, it admits that its analysis suffers from a lot of uncertainty, because AB 1774 is written so that it is quite impossible to estimate its costs and benefits.

The sponsor, Assemblywoman Sally Lieber, states (incorrectly) that, “the common Pap test does not detect ovarian or uterine cancer. Additional tests are readily available to diagnose them, but they are underutilized.” In fact, according to CHBRP, “the standards used by plans to determine medical necessity appear to be broadly consistent with evidence-based clinical guidelines…..”

But that’s not the real problem. As originally written, AB 1774 would have mandated annual screenings, but the current, amended, language mandates “any test…..when ordered by a physician, nurse practitioner, or certified nurse midwife….” That’s right, if you want a test every week, you are free to get one after another and shift the costs to your fellow beneficiaries. Remember this the next time you consider why U.S. physicians order so many extra, unnecessary tests.

Of course, not many California women have the time or inclination to get a gynecological cancer test every week. But this mandate will undoubtedly cause a certain number of asymptomatic women to seek tests outside medical guidelines. As CHBRP notes, this can lead to false positives that result in unnecessary, expensive, and sometimes harmful interventions. It will also allow unethical physicians and labs to make money hand over fist without any constraint.

By shoving AB 1774 onto the legislative calendar alongside a bunch of mandates that have lesser, or even trivial, costs, Democratic legislators and Anthony Wright, of the self-styled “patient advocacy” group Health Access California, have been able to convince Capitol Weekly that the health plans are “whining” about “bupkis”.

But they are not. CAHP concludes that these mandates will cause premium hikes that will cost 85,000 Californians their health insurance. That is hardly what I call a “benefit” of political intervention.

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.