State Health Benefit Mandates Come with New Costs

Margaret Dick Tocknell, for HealthLeaders Media , March 14, 2012

The Department of Health and Human Services struggled for months to define what essential benefits should be covered under the Patient Protection and Affordable Care Act before announcing that it would let the states decide—sort of.  (The Institute of Medicine  weighed in with a 300-page report last fall.)

Now states still have a bunch of hoops to jump through, including figuring out what to do with their own mandates.

Under essential health benefits, each state can select a health plan to benchmark coverage for the 10 broad categories of coverage. The options include the largest HMO in the state as well the smallest group plan. But here's the catch: HHS will require states to defray the costs of any state-mandated benefits not covered by the selected benchmark plan.

Legislatures are picking up on this potential mandate problem. Some are advocating the repeal of every healthcare benefit mandate on the state books while others are a taking a more measured approach and endorsing studies of the costs associated with their mandates.

A timely study released by the National Institute for Health Care Reform may put some of the legislative concerns to rest. It concludes that few benefit mandates are likely to exceed a state's essential health benefit package. And even if they do, a state's financial liability to pay for the additional mandated health benefits probably will not amount to much of a cost burden.

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