HHS Encourages States to Raise Insurance Premiums
The New York Times has an interesting article this morning about various provider groups – chiropractors, acupuncturists, and others – lobbying states to be included in their list of mandatory “essential” health benefits. Unfortunately, the Obama Administration is encouraging these efforts, by allowing states to free-ride on federal taxpayers for the costs of imposing these mandates. Section 1311 (d)(3)(B) of Obamacare explicitly requires states to pay for the incremental costs of any added benefits above the minimum thresholds – because these added benefits will raise federal spending on Exchange insurance subsidies. But according to page 5 of the Administration’s proposed rule on essential benefits, HHS now proposes to waive that requirement in virtually all cases:
We propose that state-required benefits enacted on or before December 31, 2011 (even if not effective until a later date) may be considered EHB, which would obviate the requirement for the state to pay for these state-required benefits….
In this proposed rule, we interpret state-required benefits to be specific to the care, treatment, and services that a state requires issuers to offer to its enrollees. Therefore, state rules related to provider types, cost-sharing, or reimbursement methods would not fall under our interpretation of state-required benefits. Even though plans must comply with those state requirements, there would be no federal obligation for states to defray the costs associated with those requirements….
We expect there will be few, if any, payments made for state-required benefits since required benefits enacted prior to December 31, 2011 will be part of EHB, and therefore will not require the state to incur any costs.
This wording means that 1) all mandates enacted prior to January 2012 are exempt from the Obamacare requirement, and 2) going forward, all provider-specific (as opposed to disease specific) mandates will also be exempt from the statutory requirement. In other words, states now have the ability to jack up premiums – by imposing costly new mandates in their insurance markets – and stick the federal government with the tab for billions of dollars in higher subsidy spending.
Candidate Obama promised repeatedly that his health plan would CUT premiums by an average of $2,500 per family. Unfortunately, however, empowering rent-seekers to impose new mandates at the state level – by allowing states to free-ride on the federal government’s largesse – won’t lower premiums for patients, and it won’t lower skyrocketing federal spending either.