Mandated Health Insurance Legislation Being Considered by State Senate

February 1, 2016

The Michigan Chamber testified before the Senate Insurance Committee last week in opposition to a bill that would add another mandated health insurance benefit to the books. Senate Bill 625 would mandate "cost parity" for chemotherapy treatments, making it even more difficult for small- and medium-sized businesses to continue to offer health insurance benefits to their employees.    

Although we are sympathetic to those with challenging medical conditions, including cancer, this legislation 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 continue to voice our opposition to SB 625 when the committee continues hearing testimony on the issue later this week.

State law already requires all health plans in Michigan to cover all chemotherapy treatments (oral chemotherapy drugs and intravenous [IV] chemotherapy medications). This legislation would take Michigan’s mandate to a new extreme by specifying that the cost of oral chemo and IV chemo regimens must be the same for the patient. However, oral chemotherapy drugs and IV chemotherapy medications have very different costs and delivery mechanism. Senate Bill 625 ignores this basic fact and says that a patient must be able to purchase a drug that costs anywhere from $4,000 to $10,000 per month or more for the same price as an IV treatment cycle that costs hundreds of dollars a month.

SB 625 is a clear example of government price controls. Oral chemotherapy drugs and IV chemotherapy medications have very different costs.  If the Legislature interferes with private contracts by setting 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 in the form of premium increases. 

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 many common plan designs in Michigan reveal 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 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. 

Please contact Wendy Block at 517/371-7678 or with any questions.