Beware of The Incredible Shrinking Insurance Benefit

The nation is starting to reconsider whether all of the services customarily covered by insurance really need to be included. Some plans, for example, now exclude services such as diabetes care, organ transplants and chemotherapy, which always used to be covered. The national reform legislation might include a lower level of benefits for “young invincibles” to encourage young people to buy health insurance.

Even some state benefit mandates are being reconsidered. The Georgia legislature, for instance, may soon have to decide whether to allow employers to offer policies to their workers that don’t include all state-mandated health benefits. State Rep. John Lunsford, the Republican lawmaker who is considering whether to introduce this measure, says that it would make health plans more affordable. Young people, he pointed out, might not need all of the coverage of older folks (that is, until they get sick).

Currently, Georgia requires all health plans sold in the state to include particular tests and procedures, including mammograms, pap smears, colorectal screening, ovarian cancer screening and prostate cancer screening.

Most states have numerous insurance mandates, and new ones are proposed every year. For example, 25 states have laws requiring that insurers that cover prescription drugs also cover FDA-approved contraceptives. Legislators in 41 states and Washington, D.C. have introduced legislation to require, fund or educate the public about the HPV vaccine, and 19 states have enacted this legislation. And 28 states require coverage of prostate cancer screening, despite disagreement among medical experts about whether this test does more harm than good.

Some of these laws were passed as consumer protection measures; many others have been proposed, and some enacted, to satisfy various interest groups such as podiatrists or chiropractors. There is little doubt that these mandates add to the cost of insurance and the underlying cost of health care: when something is covered by insurance, people are more likely to use it.

But I have some questions about the ad hoc nature of legislative decisions to add or subtract health benefits from insurance policies. Does it make sense for politicians who know nothing about medicine to decide whether or not insurance should cover a service on the basis of testimony by interested parties? Should they make such decisions based on the testimony of aggrieved patients or relatives of patients who did not receive coverage of the care that their doctors said they needed? And should different decisions on these matters be made in each state?

My own preference is that 1) decisions on the services to be covered be made by a national body of disinterested experts, shielded from interest groups; and 2) that we have a national standard benefit package. Such a package should cover all the care that medical experts believe is necessary. Anything more could be covered by insurance, if people were willing to pay more for it. But no insurance company should be allowed to offer a policy that covers less.