Proposed Mandated Health Insurance Benefits
JLARC staff evaluate proposed health insurance mandates in support of the Special Advisory Commission on Mandated Health Insurance Benefits.
JLARC Report In Brief
Evaluation of HB 657: Mandated Coverage of Habilitative Services for Children with Developmental Delays
House Bill 657 of the 2006 General Assembly Session would mandate coverage for medically necessary habilitative services for persons younger than 19 years of age with developmental delays. Habilitative services are defined as health and social services directed at either increasing or maintaining the physical, intellectual, emotional, and social functioning of developmentally delayed individuals. Similar legislation has previously been proposed. Advocates for the proposed mandate believe the medical needs of such children are not adequately met through private insurance policies or schools. Under federal law, schools are obligated to provide services to children with developmental disabilities, but they do not provide all medical services needed. Also, many private insurers do not include habilitative services in standard policies.
Medical Efficacy and Effectiveness
Speech and language therapy, occupational therapy, and physical therapy are widely accepted as being medically effective for treating some developmental delays. Two treatments which appear to be medically effective for addressing developmental delays based on relatively recent research include discrete trial training and positive behavioral support. However, even if a medical treatment is effective for some children with developmental delays, it may not be regarded as medically necessary for every child.
Social Impact
The proposed mandate is expected to have a positive impact on public health in some respects. However, ambiguity in the proposed mandate makes it difficult to predict how utilization of habilitative services would change as a result of this mandate. It appears that 28,000 children in Virginia could benefit from the proposed mandate. Less than 30 percent of insurance companies already provide the benefits described in the proposed mandate. However, coverage for some habilitative services is available through schools, the Early Intervention Services program, and Medicaid. For those without insurance coverage for habilitative services, the proposed mandate could save some families from paying as much as 73 percent of median U.S. annual household income for services.
Financial Impact
The total cost of health care could potentially decrease. However, uncertainty regarding changes in utilization and the scarcity of relevant cost-benefit analyses make it difficult to estimate the net financial impact. Ambiguous language in the proposed mandate makes it difficult to predict how utilization of services would change and potentially affect providers. For the State, there would be large costs attributable to the new role for the Department of Mental Health, Mental Retardation and Substance Abuse Services, and this role is unnecessary because it is already fulfilled by physicians. For policyholders, monthly premiums are expected to increase, but there is a wide range of estimates. Estimates for standard individual policyholders ranged from $0.31 to $2.00. For standard group policyholders, estimated premium increases ranged from $0 to $2.94.
Balancing Medical, Social, and Financial Considerations
The proposed mandate is consistent with the role of insurance because it may positively impact public health, encourage preventative treatment, and shield some families from a major financial burden for health care expenses. There also appears to be a need for habilitative services for children with developmental delays. However, the costs of the proposed mandate are unclear, making it difficult to determine whether the costs would justify the benefits. Clarifying language in the proposed mandate and gathering additional data would be useful for further evaluation of HB 657.
| Report No. 340: Oct 2006, 52 pages | Report (pdf) | Briefing (pdf) |