Disaster looming in new health coverage laws?
February 25, 2009 by Bill MeltzerPosted in: Healthcare costs, Special Report
When it comes to health-coverage laws, there’s often a domino effect.
As individual states require insurers – and in some cases, employers – to cover or offer coverage of specific people and procedures, similar laws can spread quickly to other states.
The effect on plan sponsors: Some mandates can increase your costs by 20% to 45%.
Small firms targeted, too
States are no longer targeting just the Wal-Marts and other giant companies anymore. The pressure has increased on employers of all sizes.
That’s especially true for the new “universal coverage” laws passed in Massachusetts and Vermont.
The Massachusetts law requires every firm with 11 or more employees either to cover or contribute toward everyone’s health coverage, or else pay an annual fee of $295 per employee to a state fund.
Vermont’s similar version sets the yearly fee at $365 per full-time equivalent employee. The Vermont law also requires all uninsured, low-income hourly workers to have access to a state-subsidized plan (called Catamount Health) sold through private insurance companies.
It’s up to employers to deduct the monthly premiums – $60 to $135, depending on the person’s wages – and send it to the state.
There are rumblings in at least 10 states about lawmakers pushing for universal-coverage laws. Several have formed committees to study the Massachusetts law and see if a version could be adapted to their state.
Here are three proactive steps to consider now. These could potentially save money, time and compliance headaches later:
- look into offering mini-med or similar lower-cost programs to satisfy minimum coverage requirements for uninsured employees. Monthly premiums range from about $25 to $200
- educate low-income employees about the earned income-tax (EIT) credit the federal government offers. This can make a mini-med plan free or nearly free to eligible employees, and
- use flexible spending accounts to create a tax savings on premiums for other employees and your firm.
Required procedures
The universal-coverage laws draw national headlines, but far more employers are currently affected by state laws requiring coverage for certain types of procedures. Three of the biggies:
- diabetes self-management. Nineteen states require your health plan to cover all the steps employees with diabetes take to control their condition, including nutritional therapy (if prescribed by a doctor)
- in vitro fertilization. This big ticket service adds 3% to 5% to your premiums, and is now a required benefit in 15 states, and
- cervical cancer screenings. In the last year, four more states have required all employer plans to cover yearly cervical cancer screenings for all covered female employees, spouses and dependents age 18 and older. That brings the total to 24 states.
The good news about the diabetes management and cervical cancer mandates is they can reduce your long-term costs, even if they increase them in the short-term.
Here is a good resource for keeping abreast of mandatory coverage trends around the country. The site also features state-by-state breakdowns of changes in insurance laws mandating the coverage of different treatments and conditions. For example, this report from 2006 is the most comprehensive coverage-mandate study that I’ve ever seen.
Tags: universal healthcare
February 26th, 2009 at 3:49 pm
Thanks for the info, Bill. However, I fail to see how the prospect of universal health care coverage is a “disaster.” Does it create more work for HR types? Yes. Is it an extra expense for the employer? Yes again.
But those are mighty poor reasons to deride measures intended to extend to all employees what the rest of the industrialized world considers a basic human right.
February 26th, 2009 at 4:29 pm
Here, here, Ken! Personally, I’m frankly getting quite tired of all the moaning and mumbling about increased reg’s and cost’s for, as you said, coverages that other industrialized countries see as basic. The new administration has been in office a little over a month, and the hew and cry of the put-upon (particularly the already well-off, and those with the resources to afford the best life, health, and disability plans, etc.) is practically deafening, especially considering the ever-declining state of this nation, and it’s many working poor, over the past decade.
February 26th, 2009 at 4:34 pm
To clarify: the Massachusetts law requires employers to pay only if you have eleven or more FTEs and most of the low cost plans do not qualify. As a California based employer who operates in all 50 days and Puerto Rico we continually deal with various laws and practices that sometimes make no sense. We accept these as the cost of doing business, just as we accept UIC, WC, FMLA, ADA, Title VII. Providing health care to all, regardless of their ability to pay, is once again, the right thing to do. Hopefully we will apply the lessons learned from MA and Vermont. Trying to think of a scenario when a large venture was perfect the first itme someone tried it.
February 26th, 2009 at 4:50 pm
What are you talking about?? Universal health care is a disaster. A basic human right? Please. What I’m tired of is people demanding that the government (and by extension, taxpayers) pick up the tab for entitlements. It is the responsibility of compassionate private citizens, not the government to take care of each other. If you don’t believe universal health care is a disaster, go to Canada and see how they wait months for basic care or how older citizens are denied care because they are not deemed to be worth the expense of the treatment. Does that sound humanitarian to you? No! Yes we need health care reform, but the government is not the answer. Mandatory coverage is not the answer. And just to prove the point, the Massachuesetts mandated plan cost that state over $800 million more than what it was expected to cost–in just one year! This is insanity. Whatever happened to the American Spirit and self-reliance?
February 26th, 2009 at 4:59 pm
In vitro fertilization a basic human right? That’s a bit of stretch to me. Several other aspects of required health insurance coverage are beyond basic as well.
though the coverage is not a “disaster” the cost, exorbitant coverage elements and added bureaucracy could have significant negative impact; expecially considering our current economic realities.
February 26th, 2009 at 6:12 pm
Just once I would like to see a proposal from this president that does not have a negative impact on corporations. Please make it stop…sometime. I still have yet to meet a person that could not get health care if they needed it. That is universal health care.
February 26th, 2009 at 6:21 pm
Wow! the first three responses in a row and all a positive consensus!. I am impressed. Maybe th majority of this nation is behind us catching up with the rest of the industrialized world. Besides if I could get ccoverage for my employees at ayearly fee of $365 per employee(Vermont’s state fee), I’d grab it in a heart beat. But that is socialized medicine if the state government is paying for it, and we know what a bogeyman any socialized anything is.
The worst thing I read in this article is that in-vitro fertilization is a required benefit in 15 states. What lobbyists push for that? But on a more compassionate note, I suppose everyone is as entitled to breed as they are entitled to health care. I just have a hard time putting petri dish conception into the same category as health care.
More importantly I’d like to get the Amercans off the fixation on “coverage” which usually means “insurance” and on to actaul health care, which is more important to your family, health care or wider highways & repaved streets? The govt pays for the latter and no one complains. Insurance is a big gambling business. The companies bet we won’t get sick and we lay down our dollars betting we will. When we actually do, there is fine print and exclusions and exceptions that allow the insurance companies to lose a little less on their bet. Instead how about a system, where if we get sick we get medical attention without having to worry about complex paperwork and potential denial, or deductables that still require bankruptcy.
February 27th, 2009 at 7:54 am
Whew! I was so uplifted by the responses so far. As I was reading the article I felt my blood pressure rising over the implied “poor employer.” Supplying health care coverage is the right thing to do. Is this something greedy owners just don’t get?
February 27th, 2009 at 8:55 am
How is the Massachusetts plan working out? I had heard that it is in trouble with massive debt – is that true or partly true?
February 27th, 2009 at 9:06 am
To Ken and Mary: Since when is health care a RIGHT? Last time I looked, it was nowhere in the Constitution. Liberals want to make it a right, vis-a-vis socialized medicine, and with all the mandates already forced upon group plans, we are almost there. Where does it stop? Who pays for it? We are heading down the path of ruin when all these feel good programs put us in the same boat as Canada and England, both of whom have horrendous health care thanks to the socialized medicine forced upon the citizens. Six months to get an MRI? Three months just to see a doctor?
The US has the best health care EVER, and the government, (read: democRATS) want to screw it up completely.
BTW – I disagreed with Bush when he signed off on the Medicare and prescription medicine debacles.
February 27th, 2009 at 9:24 am
Thanks for the comments! I agree with Cathy, there are things we accept as part of doing business. And providing healthcare for all is indeed the right thing to do.
I looked at the chart on State Mandates and their cost. Can’t speak for the rest of the states, but that chart is not really accurate for mine. For example, it says we have mental health parity at a cost of 1-3%. We have something that is called MH parity, but is not and there is no possible way it raises costs by that much. All it provides for is that MH be covered out of network, except on HMO. And that has to be added in by rider, which costs 1%. Since there are still limitations for both in and out of network, not covered as any other illness, no one signs up for it. And this is not MH parity. There were also various other items that were not entirely correct. I don’t know who the group is that put that chart together, but it makes me wonder if they didn’t set it up to make state mandates look “bad” and “costly,” to make their point. Just wondering about the objectivity there.
February 27th, 2009 at 9:25 am
Larry…thanks for the courageous…and correct…but not politically correct response…at least someone is attempting to reason what “right” really is…the libs will browbeat you for sure…but I know my predecessors worked for…and thus earened their “rights”…as do I…now…everything is an entitlement…but of course…as that mentality increases across our nation everyday…so does the national economic crisis…that reasoned people do not see the correlation…is…well…stunning…
February 27th, 2009 at 9:33 am
I am sorry Larry but everything you just said is absolutely untrue. The majority of the citizens of Canada, England, and France approve of their health care system. The system they use may have it’s flaws, but you won’t find one that doesn’t. And as it is true that we have great health care, it’s not the health care that is in question, it’s the coverage that we are worried about. It is also fact that France is #1 in health care and coverage, NOT us. I am sorry but health care is a right NOT a privilege. There is nothing socialist about universal health care coverage. If you really believe that these systems are socialist, then don’t send your kids to public schools, don’t ever call 911, and don’t call the fire department, because these must all be socialist programs right? I just get so frustrated when people make these ridiculous arguments that make no sense. We are the only industrialized nation that does not have a universal health care program and it’s time to make it happen. 46 Million people go without health care coverage everyday and that is just sickening to me. I hope that the President is able to make universal health care law because our country needs it.
February 27th, 2009 at 9:43 am
For Mel. If you don’t know anyone that can’t get healthcare, than you don’t live in my state, that’s for sure. If you mean that anyone can access an ER, then I suppose you are right, although since you are concerned about costs to taxpayers and/or corporations, this is a good way to jack those up, send everyone to the ER! Now, if you are talking about people being able to purchase health insurance, I’d love for you to check the pile of folders on my desk right now of people who have been declined for coverage. In my state, diabetes is an automatic decline. You can be otherwise healthy and your condition managed, but you still can’t buy health insurance.
February 27th, 2009 at 9:53 am
Most employees have the choice of electing employer sponsored healthcare now. It is my experience that even though our company pays 65% of the premium at all levels, some employees would rather go on vacation or buy stereo systems and rims for their cars than pay their portion of the health insurance premium. It is their right to choose. If these initiatives are enacted in all states, wages will go down in response with fewer bonuses, merit increases, or profit sharing contributions in order for employers to pay for it. The general public likes the idea of universal health care in theory, but it will not bode well in reality. Employers will be forced to offer bare bones coverage to stay within the law. Employees will not like when their choices in health care are taken away and their standard of living goes down. In this litigation happy society, the courts will not be able to keep up with lawsuits that result.
February 27th, 2009 at 9:55 am
To Boston Taylor,
How right you are. Unfortunately most Americans have been programmed to think these systems in other countries do not work (insurance companies and lobbyists). America is way down on the list of developed countries in terms of healthcare and mortality rates, particularly infant mortality. It’s shameful.
February 27th, 2009 at 10:04 am
I’m really amazed at the lack of variety of responses to this topic. I understand that we all want health care. Is it a basic human right? I think not. I try to think of how many government run programs are efficient and effective. I wonder how many companies, especially small employers, will have to cut their staff in order to try and meet this extra tax or go out of business because they cannot remain competitive. I think that companies that can afford to offer health coverage will do so to attract the best talent. Those that can’t, won’t, but will figure out different ways if possible to attract and maintain the work force that they need.
I am also interested why the “Rich” of other countries come here for health care coverage than get the “free” government run health care of their own country. Sorry for the scattered thoughts!
February 27th, 2009 at 10:30 am
How many of you who are for additional regulations are a part of the budget process in your companies? How many of you have to work on the 1,3,& 5 year plans. Additional costs such as the ones outlined in this article will slow and in some cases stop the growth of a business- Put all of the numbers together that the employer pays for a single employee, those costs are real and when they grow without a way of cutting costs in another area then raises are capped, benefits are rolled back, the addition of new FTE’s are reduced or cut out. Although I understand the emotional band wagon that some get on regarding Universal Care the concept is being proven not to work. Be honest, looks at the state of the system in Canada and Great Britian these countries that have the type of coverage you wanting all have stalled or negative growth in thier business sectors. Since I have a unique presepective of also working in the current US healthcare industry I have real first hand expierence, I do not need to rely on talk shows or politicians to give me information and I have not been programmed to think that the universal systems don’t work as has been mentioned in other posts. The reality is in each of the countries the have universal care that there are two systems, if you fall within the public system there are incredible waits for items we do right now. An EKG or Holter Monitor tests are a 4-6 month wait- this is unacceptable- Is there a problem with the working unisured in this country yes, is throwing out the baby with the bathwater the answer- no. You should be very careful about what you wish for- you may very well get it and there will not be any going back once you do.
February 27th, 2009 at 10:36 am
I work for a “county” hospital. It is interesting that in all the discussion there is no separation between the insurance companies and the actual healthcare providers. Providers are Healthcare not the insurance companies. Providers give care in advance then either get paid or don’t. You can check with any hospital or physician to find out how much bad debt and charity comes thru their doors. My biggest frustration is that the insurance companies Blue Cross, Aetna etc. are posting profits while the small hospitals providing care to the patients struggle every day. We struggle to care for the patient in the bed while the insurance companies tell the patient and us that service is not covered. The cost of labor and technology continues to go up while payers want to reduce payment but still demand high quality service. It is amazing to me that people from around the world come to America for healthcare even though they have really great socialized healthcare. Go figure.
February 27th, 2009 at 11:01 am
I am going to go out on a limb and assume that nearly everyone wants every American to have access to affordable “basic” (admittedly an arguable term) healthcare. Where the divisions begin is on how we pay for it and what is basic.
The greatest current push is toward Government mandated coverage levels and government funding and/or government required funding. Corporations reasonably resist this approach because it negatively impacts the bottom line and reduces employee satisfaction due to reduced wages, personal choice and in extreme cases, reduced employment levels.
To date, we have not seriously considered very many alternatives. What about requiring individuals above a determined earning level to purchase their own insurance? Are we willing to accept that some will be able to afford better or more health care services? What about removing laws that increase costs without adding value? What about Torte reform?
What it boils down to is who we trust to fix our current health care problems. I do not trust the government to fix it (run it or manage it). Government in general, is not able to manage programs well. They are filled with bureaucracy, overspending and inefficiencies as well as being self protective. Government can, and should, pressure the free market to fix the problems. They can do this by enacting laws requiring fairness and being courageous enough to eliminate legislation that promotes inefficiency and increased costs.
The easy answer is rarely the right one. Looking to our government to wave its magic monetary wand is the easy, not the right, answer.
February 27th, 2009 at 11:37 am
Requiring in vitro coverage worries me. These are very expensive procedures that only a small percentage of people would need but would raise everyone’s rates. If you require covering in vitro you should require covering the costs of adoption if you consider having children the right of everyone. There will be many more “Octomoms” if IVF is covered, that is for sure!
February 27th, 2009 at 12:12 pm
My position that every citizen/legal resident has a basic right to health coverage stands there with the basic right to educating our children and right to free speech. My entire (large) family lives in Canada. Yes, there are problems waiting for certain tests, but statistics have proven that emergency situations and long term diseases have a higher success rate than our country. Would I propose a system that mirrors the Canadian one – no, do I think there is a middle ground – yes. To those who believe that everyone can get health coverage, you’re wrong. Everyone can get treated in emergency and life threatening situations but who picks up the tab – of yeah, the providers, state funds, MediCare, etc. True those are often under the guise of “Government” oh, that’s right, it’s funded by you and me, the taxpayers.
February 27th, 2009 at 12:53 pm
I bet that everyone here arguing fervently that health care is not a basic right – has at least decent health coverage. I don’t think that our state and federal governments have the right answers yet, but I do think that making health care available to those who can’t afford coverage is the right thing to do. Not necessarily health insurance coverage to all, but available health care when needed. It could be as simple as an agreement from specific doctors and hospitals to charge low costs for this type of care when needed. In return, maybe they are entitled to a small tax break for offering these services. I honestly don’t know the answer. But to deny health care to those without the luxury of coverage isn’t right in my mind. However I also don’t agree that in vitro fertilization should be a “right”.
February 27th, 2009 at 1:10 pm
Cindy – I think that’s the bottom line. Very few parents would be okay with their 6 year old’s bare hand in a public toilet.
Bad judgement, but probably not worth the principle losing her job.
February 27th, 2009 at 1:12 pm
Sorry- posted on the wrong story.
February 27th, 2009 at 1:36 pm
Monica — I’m sure you’re right — the figures can be manipulated to slant the results any way you want. MS — I’m also sure you’re right — those who are the most strident in their opposition to this have good health insurance and access to good care.
Whether these plans are the best solution to the problem is still to be determined, but at least admit there is a problem and America is way behind the rest of the industrialized world in healthcare. We can wring our hands and moan about the problem, or we can start trying out some solutions.
February 27th, 2009 at 1:45 pm
And I have to agree that IVF should not be a ‘right’ — that is not basic health services.
February 27th, 2009 at 2:33 pm
I don’t believe you will see a Canadian style single payer system in the USA, at least not in my lifetime. However, for those that want some positive ideas, here are some. You can begin with medical technology. In some countries, the insurance ID card has a data strip, like your ATM. When you go to the doctor, the card is inserted in a credit card-like device that reads all your medical info. The physician adds to it, saves it and the last thing he does is hit the send button and the claim is filed immediately. By having all the records together, it avoids costly things like duplication of procedures, doctor shopping, adverse reactions to medications, etc. From an administrative standpoint, it saves about 7-8%.
One of the things I have noticed about pretty much all the countries that have a single payer system is that doctors are educated for free. Part of the reason that fees are so high is the doctors have to pay back incredible loan amounts that financed their education. I don’t think it would be that difficult to provide free education to those wanting to be doctors. Don’t want that to be funded by taxpayers? Fine. Schools can set up endowments from private donations or get some type of tax credit.
The one thing that really needs correction is from my earlier post: people that cannot qualify for private health insurance. If they are made guarantee issue products, premiums for all would go through the roof. However, if health insurance was *required*, like auto insurance, it would stop the bleeding. The reason being is basic insurance principle: 20% of the people incurr 80% of the claims. If people like my 21 year old nephew (healthy, but uninsured by choice) were required to have coverage, it offsets the unhealthy people.
These are just a few ideas that don’t require nationalizing anything and are probably pretty cost efficient in the long haul. I could get on my soapbox about doctors and prescription drugs, but I’ll spare you all!
One last word on state mandates. The states wouldn’t have had to mandate things if the insurance companies covered them to begin with. I am old enough to remember when maternity, child immunizations and mammograms weren’t covered. I consider these to be “good” mandates. However, I agree, IVF should not be mandated. It is a choice and a very expensive one for the rest of us. Also, I hope to never see mandates on bariatric bypass or lap band. I handle the benefits for my company and every employee that asks about whether this is covered is grossly overweight and has not even tried a lifestyle change. They don’t participate in our Weight Watchers program, they have never attempted to see a Nutrionist (which IS covered under our plan), and they have never attempted an exercise program.
March 13th, 2009 at 5:24 pm
Universal Healthcare is never FREE; the income tax rates in these nations hover at anywhere from 40% to 55% and can be upwards of 65% for some individuals. Universal Healthcare does not guarantee you will be treated. The rest of the Industrialized World does not offer healthcare to all of their citizens as you report. Universal Healthcare offers treatment to those deemed worth the cost to the state, within the state sanctioned guidelines which include the time of treatment, length of treatment and cut off time should the treatment fail to yield the states expected results.
The acceptable rate of death – while waiting for treatment – in the US is less than 3%; the acceptable rate in the rest of the exalted “Industrialized Nations” with Universal Healthcare is right above 11%. Experimental treatments are rarely considered and require what would be considered an act of congress in the US to get approved. If you have cancer, you’d better hope that the first round of treatments offered to you works or shows signs of working because chances are, you won’t get too many other options; if it doesn’t show improvement of some kind, why should they take the chance on another expensive attempt? One of the oldest jokes in England is about its healthcare …”Her Majesty’s Hospitals are where the British go to die; America is where the British go for treatment.”
Visit a walk-in or day clinic in any town in the US which is close to Canada, you can’t get treated because the waiting rooms are full of Canadians hoping to get seen within the same year they take ill. Hey, it’s all okay, the American pharmaceutical companies only charge them pennies on the dollar for their drugs but in the US, they charge what the market will bear … they get what people are willing to pay to live. I call that greed yet I’m not willing to throw in the towel and let the government take over my healthcare. I’ve seen how they handle Social Security, Welfare and Public Schools … why would I willingly let them handle something as important as my Health?
Yes to Regulations and more oversight on skyrockeing costs … no to gov’t cheeze healthcare.