Making Health Policy Through the Appropriations Process
During consideration of H.R. 3666, the Veterans Administration
and Housing and Urban Development appropriations bill, the United
States Senate by voice vote approved an amendment offered by
Senator Bill Bradley (D-NJ) that would require insurers to cover a
mother and newborn for at least two nights in the hospital after a
normal birth, and at least four nights after a caesarean section.
Coverage for fewer days would be permissible if agreed to by the
attending physician in consultation with the mother.
In addition, by a vote of 82 to 15, the Senate adopted a mental
health "parity" amendment offered by Senators Pete Domenici (R-NM)
and Paul Wellstone (D-MN). This amendment -- a scaled-down version
of the mental health parity provision dropped from the recently
enacted Kennedy-Kassebaum health insurance reform bill -- would
require group health insurers who offer mental health coverage and
apply aggregate lifetime and annual payment limits on coverage
either (a) to include plan payments made for mental health services
under the aggregate lifetime and annual payment limits for medical
or surgical services, or (b) to establish a separate aggregate
lifetime and annual payment limit for mental health that is equal
to or greater than the limit established for medical and surgical
services. On September 11, the House of Representatives, by a vote
of 392 to 17, passed a nonbinding instruction to conferees on the
VA-HUD bill to adopt both provisions. Both the Bradley and
Domenici-Wellstone amendments represent a not-so-subtle creep of
government control over the health care market.
Compounding State Regulation
The overregulation of health insurance at the state level is a
problem for both small businesses and insurers. In 1970, there were
48 mandated benefit laws (laws requiring specific treatments,
benefits, or procedures) nationwide. As of 1995, because of intense
lobbying by medical practitioners and advocates seeking coverage
for various diseases, the number had risen to over 920. And this
does not include almost 100 so-called anti-managed care laws (such
as "any willing provider" and "mandatory point of service" laws) by
which states restrict the ability of managed care plans to contract
with providers and establish cost sharing.1 The most
prominent form of federally tax supported, employer-based health
insurance is managed care. Because of the rapid expansion of this
form of health care, with its restrictions imposed on both doctors
and patients, state legislatures are rapidly increasing their
regulation of the insurance industry. More than 1,000 managed care
bills are being considered in state legislatures in 1996; 56 have
been passed into law in 35 states so far.2
Imposing Higher Costs
The Congressional Budget Office (CBO) estimates that Senator
Bradley's maternity benefit mandate would cost the federal
government alone some $223 million over four years in increased
outlays for Medicaid and the Federal Employees Health Benefits
Program (FEHBP), and in lost revenues due to lower wages from
increased health costs. The CBO also says that the new maternity
benefit would increase aggregate premium payments for
employee-based and individually purchased health plans by 0.06
percent. In addition to the extra costs for government programs,
the CBO estimates that direct private-sector costs would increase
by $180 million in 1998 and $220 million in 2001.
According to a CBO analysis conducted on behalf of the Senate
Budget Committee, the estimated cost of the Domenici-Wellstone
mental health parity provision of the VA-HUD appropriations bill is
less than the earlier version -- estimated at $618 million over 5
years (the provision sunsets in 2001).3 The potential
cost also was reduced somewhat by a modifying amendment, offered by
Senator Phil Gramm (R-TX), stipulating that if a group health
policy experienced a premium increase of 1 percent or more in a
given year due to this provision, that insurance policy could be
exempted from the mandate.
While both amendments attempt to address real issues -- namely,
the equitable treatment of mental health services and the health
and safety of mothers and newborns -- they are bad public policy.
The federal government should not be in the business of determining
what benefits, treatments, or procedures private health insurance
must provide to patients. This should be a contractual decision
between consumers and insurers, and between doctors and patients.
Whether to cover treatment for mental illness (or any illness)
should be an insurance contract issue, not a political decision or
an area for congressional intervention.
Moreover, experience at the state level indicates that mandates
typically are the product of intense lobbying by provider interests
rather than sound health policy. Thus, Congress should realize that
once one group of practitioners begins to benefit from legally
mandated coverage for its services, others will argue for similar
legal guarantees. In the meantime, the price of legally privileged
medical benefits hurts legally underprivileged medical
practitioners, because businesses or insurers have to cut back
other benefits to accommodate the new law. Desperately fighting for
equal treatment, the excluded practitioners and advocates for
certain disease groups lobby intensively for expansion of the
mandates. The slippery slope of mandated benefits is transformed
into spiraling costs.
Let Consumers Fire Bad Insurance Companies
Rather than adopt bad health care policy, Congress should allow
consumers to choose not only their health insurance coverage, but
also the kinds of medical treatments and procedures they want at
the prices they wish to pay. In a consumer choice system,
individuals and families -- not employers or managed care companies
-- would choose the health plans and benefits that best suit their
needs. The mother of a newborn forced out of a hospital before her
time should have the right to fire her insurance company.
Individuals and families, given tax relief regardless of where they
work, should be able to purchase comprehensive health insurance,
including catastrophic coverage, without imposing high costs on the
private health insurance plans of other workers and their families
with different needs. While rhetorically packaged with phrases like
"incremental reforms" or "patient protections," federal mandates --
especially on top of state mandates -- do nothing to reform
America's health care system. All they do is raise costs and limit
consumer choice and competition.
- Blue Cross/Blue Shield 1995 Survey of Plans.
- American Medical News, September 9, 1996.
- The mental health parity provision agreed to earlier this year
by the Senate would have imposed huge new costs on working
families. The CBO estimated that premiums for traditional fee for
service plans would increase by 5.3 percent, while managed care
plans would cost the consumer an additional 4 percent.
Understanding that it is workers and their families that ultimately
bear the costs of mandated benefits, the CBO predicted that this
provision would force employers either to cut back other benefits
-- or health insurance altogether -- or to pass the higher cost of
insurance on to workers in the form of lower wages.
Congress is poised to enact legislation which, for the first time,
would require private commercial health insurance carriers to
provide specific benefits. Such federal mandates inevitably
increase costs while limiting consumer choice and competition. In
particular, these proposed mandated benefits would increase the
costs of health insurance premiums for employers, who then would
either limit health benefits or pass the higher costs on to workers
and their families in the form of lower wages. Worse, Congress
would be establishing a precedent for legislative determination of
what medical benefits, treatments, or procedures Americans must
have in their personal insurance plans.