Mandated Coverage

The term mandated coverage refers to services provided by insurance companies and instructs insurers on what benefits they must provide for their insured. Many states require coverage mandates of health plans in order to be eligible to sell their health insurance products in those states. In 1965, there were only 8 mandated health insurance benefits laws in the United States; in 1970 there were 30. The number grew to 1081 in 1992. These mandates cover a wide variety of coverage issues, including alcohol treatment, [Page 346]infertility, mental illness, hairpieces, and liver transplants. The mandates are imposed by law. These laws have been established in an attempt to force insurance companies to provide broader coverage to members for certain services and to constrain insurance company denials for payment of some services. Federal law mandates primarily affect hospitals and health centers that are in part or wholly funded by federal dollars.

In response to the imposed mandates, third-party payers have been forced to provide additional covered services. The effect has ultimately been to adversely affect the insured. There has been a significant increase in the number of uninsured as a result of mandates, because the costs of premiums for coverage have escalated. Because of this, some states have moved to limit mandates for small businesses; however, the outcome has frequently been to financially punish small businesses providing health care coverage, because of increased health care premiums paid, instead of to allow these companies to opt out of high-cost benefit plans. According to one study, mandated insurance coverage for dental services alone increases premiums by 15%. Another study states that one out of every four uninsured people has been priced out of the market by state-mandated benefit laws. The costs of copayments have also increased significantly as a result of the mandates.

State legislatures, nonetheless, continue to pass mandates for different “benefits” in an attempt to assist the insured. Wyoming has submitted coverage for all diabetes care, including equipment, and prohibits exclusion of coverage for newly diagnosed members. New Jersey, New York, and four other states have now mandated coverage for breast cancer treatment, chemotherapy, and prosthetic devices. As mandates increase, the costs of premiums continue to escalate, and the number of uninsured rises.

The most widely known federal mandates are COBRA and a section of this act called EMTALA.

The Consolidated Omnibus Budget Reconciliation Act (COBRA) of 1985 contains a segment that mandates continued coverage of employees after termination from their existing job. This act is designed to levy severe penalties on companies that do not facilitate continuity of health care benefits on dissolution of employment. The regulation, however, placed no restriction on the additional premium cost to the employee following termination. It is not uncommon for an employee to have his or her health care premium increase more than 40% at the time of enactment of COBRA compared with the monthly premium prior to discharge from the employer.

Another section of the COBRA mandate requires care of patients when they arrive to receive emergency medical care. The recipient hospital emergency room is mandated to provide usual care regardless of the patient' ability to pay, or the brand of the patient' insurance. This law has received great attention recently. It is called Emergency Medical Treatment and Active Labor Act. EMTALA is designed to prevent transfer of a patient because of his or her inability to pay for medical services. This indirectly affects paying patients by shifting expenses from those patients that cannot be transferred but are unable to pay, to those in the hospital system who are able to pay.

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