Mandated Health Insurance Legislation to be Considered by State House

November 11, 2013

On Tuesday, November 12, the House Health Policy Committee will begin taking testimony on legislation to add another mandated health insurance benefit to the books, a la Obamacare. The Michigan Chamber opposes this mandate because it will only add to the difficulty that small- and medium-sized businesses face in continuing to offer health insurance benefits.   
House Bill 4751 would mandate "cost parity" for chemotherapy treatments. Although we are sympathetic to those with challenging medical conditions, this legislation is ill-conceived, as it amounts to government price controls, interference in private contracts and could result in some cancer patients paying higher out-of-pocket costs for their oral chemotherapy drugs. We will be voicing our opposition to HB 4751 at the House Health Policy hearing, reminding lawmakers that: 

All health plans in the state of Michigan are already required to cover all chemotherapy treatments (oral chemotherapy drugs and intravenous [IV] chemotherapy medications) under Michigan law. This legislation would take Michigan’s mandate one step further by imposing limits on how health plans administer benefits for oral chemo drugs and IV chemotherapy medications.

The legislation will result in higher health insurance premiums at a time when costs are already rising due to medical inflation and the various mandates in Obamacare. As a result of these increases, many job providers may be forced to increase co-pays and deductibles – or stop offering health insurance coverage altogether. Given that the federal ERISA law exempts self-insured groups from state mandates, the legislation will only apply to small- and medium-sized firms, generally firms with fewer than 100 employees.
HB 4751 is a clear example of government price controls. Oral chemotherapy drugs and IV chemotherapy medications have very different costs.  If the Legislature sets an arbitrary limit on the patient’s portion of these costs and does nothing to change the underlying price of the drug, it simply shifts the remaining costs to the employer. 
This legislation will result in some enrollees paying higher out-of-pocket costs for oral chemotherapy drugs. This legislation is based on an incorrect assumption that patient out-of-pocket costs are higher for pharmaceutical benefits than medical benefits. However, comparisons of the most common plan designs in Michigan reveals that this legislation will act to increase the overall cost that many cancer patients pay for his or her chemotherapy.
Out-of-pocket costs are already limited under the requirements of the Affordable Care Act. Each plan in the four benefit categories have corresponding limits on benefit costs (Bronze is limited to 40%, Silver is 30%, Gold is 20% and Platinum is 10%). Many individuals will qualify for further reductions in out-of-pocket costs based on income.
Approving a cost mandate for oral chemo drugs opens the door for a wave of new insurance mandates for other specific diagnoses (e.g., multiple sclerosis, diabetes, rheumatoid arthritis, Alzheimer's disease, etc.).  If the Legislature approves this, they open a Pandora’s Box of health insurance mandates and send a clear message that Michigan is willing to pick winners and losers in health care access and affordability.

In our testimony we will be reminding lawmakers that piling on more government-imposed health insurance mandates is the wrong answer at the wrong time and, in this case, could ultimately increase costs for many cancer patients.   
Please contact Wendy Block at 517/371-7678 or with any questions.