Consumers shopping for coverage in new online marketplaces may scratch their heads when they come to a handful of plans in Virginia: Why do some cost more than $1,800 a month?
No, the plans do not include gold-plated hospital beds or guaranteed same-day access to doctors. Instead, those premiums reflect an add-on benefit for a type of costly surgery for obesity which makes them up to six times more expensive than plans without such coverage.
That means a Virginia consumer considering so-called gastric bypass or bariatric surgery will have to pay up to $1,500-a-month more for plans that cover the surgery.
Consumers in Maryland, by contrast, could buy any policy in the marketplace – and for dramatically less than the Virginia rider plans – and be covered for bariatric surgery since that state requires all plans to pay for it. In the District of Columbia, insurers are not required to offer the surgical treatment, either as a rider or a standard benefit.
The difference between Virginia’s and Maryland’s approach reflects some of the reasons for the broad variation in prices and benefits among policies offered under the federal health law.
Debates over how much to require insurers to cover and where to draw the line have long roiled state capitols as lawmakers are lobbied to mandate coverage of specific treatments or specialists. State laws vary, with some having fewer than 20 mandates and others, like Maryland, having more than double that number.
Proponents see mandated benefit coverage as a way to protect consumers, while opponents say they drive up the cost of premiums for everyone, sometimes for questionable treatments pushed by special interests. Recent fights have included whether to require insurers to cover treatment for autism or in-vitro fertilization.
“This reflects a classic tension between trying to keep costs low and trying to do the right thing,” said Dan Mendelson with consulting firm Avalere Health. “Legislatures have to make a call on whether something is a necessary medical intervention or just something nice to have.”
’A Barrier’ To Coverage
Obesity is considered a medical condition, but surgical interventions are not universally covered. While many large, employer-sponsored insurance plans, along with Medicare, cover the surgeries, policies sold to small businesses and individual customers are governed by state rules, so coverage is more variable. The procedure, which essentially makes the stomach smaller, is one of a number of treatments offered to patients who are severely overweight. Nationally, about 200,000 such surgeries are performed annually, usually costing between $15,000 to $25,000.
Virginia is among a handful of states, along with Georgia and Indiana, where laws that predate the health law require that bariatric treatment must be offered as an option for consumers, but not necessarily included in every plan sold to small businesses and people who buy their own coverage. But bariatric surgery is not a required benefit in the plans selected by Virginia or Georgia as the standard for what must be sold through the new marketplaces.
Virginia’s pricing “is a barrier for people getting coverage,” Joe Nadglowski, president and CEO of the Florida-based advocacy group Obesity Action Coalition. “Some of the decisions that insurers make around bariatric surgery seem not to be based on economics or health, but are often more based on stigma and bias.”
One mid-level policy from insurer Optima that covers the treatment, for example, is priced at $1,858 a month for a 27-year-old, but the same plan from the same insurer is $285 without the rider. Similar plans by other insurers, including Aetna, Coventry One and Innovation Health, range from $1,100 a month to $1,500, well above what the insurers charge for plans without the rider.
A spokesman for Blue Cross Blue Shield of Georgia said that insurer is not offering riders that cover the surgery in its policies sold in the new marketplaces.
Under the health law, benefit packages must include 10 broad categories of care, including hospital coverage, maternity care, prescription drugs and mental health services. But states were given some leeway in choosing what else to include in that list. Along with Virginia, 27 other states chose benchmark policies that do not cover the surgical treatment for obesity, according to an analysis by the obesity coalition.
Maryland chose a benchmark plan that does require coverage, reflecting its longstanding law. A Maryland Health Care Commission report from last year estimates the state’s mandate to cover treatment for severe obesity added about 0.4 percent to the cost of an individual health policy, far below the 600 percent differential seen in some of the plans with riders in Virginia.
Maryland Plans ‘More Affordable’
In states like Maryland where the cost of surgical treatment for obesity is included in all plans, the premiums are “more affordable than the Virginia plans with the add-on bariatric coverage, which drives up the price for those specific plans,” said Aetna spokeswoman Cynthia Michener.
Some question whether Virginia insurers may be “adhering to the letter of the state law but not the spirit of the federal law,” said Deborah Chollet, a senior fellow at Mathematica Policy Research, a nonpartisan research firm in Washington.
That’s because the federal law says insurers cannot reject patients with medical conditions, nor charge them more, starting Jan. 1. Severe obesity is considered a disease, according to the American Medical Association.
“The health law says you cannot discriminate based on health conditions,” said John Morton, chief of bariatric and minimally invasive surgery at the Stanford University School of Medicine and president-elect of American Society for Metabolic and Bariatric Surgery. “Here they are adding a premium to a disease. It’s coverage in name only. It’s disgraceful. “
The legal arguments are not a slam dunk.
“You could make an argument that it is effectively discriminating … against someone who has a particular medical condition, but it’s clear under the law that insurers can charge extra for non-essential health benefits,” said Timothy Jost a health law professor at Washington and Lee University. “If the state has determined this is not an essential health benefit, then you would have a hard time arguing it.”
While state mandates vary, Virginia’s laws around bariatric surgery for obesity are “kind of an anomaly,” said Steve Cindrich, director of strategic marketing and business development at Optima, an insurer owned by hospital system Sentara.
In Virginia, bariatric surgery is “not an essential health benefit, which is why the state has allowed carriers in this state to treat it as a rider,” making it a choice for consumers, he said.
Policies that include bariatric surgery as an add-on have been offered for years, Cindrich said, noting, however, that they are “an expensive offering, which has kept it from becoming more popular.”
Similar riders for maternity care were often seen in policies sold nationally to consumers who buy their own coverage, said Mathematica’s Chollet.
“The difference in the cost of a plan with pregnancy coverage and those without was essentially the full cost of a normal delivery,” she said, noting that the health law requires insurers to cover maternity care, starting Jan. 1.
Riders for specific conditions or treatments are “essentially a pre-payment plan” for the treatment, Chollet said.
While they may simply reflect Virginia’s law, the riders could also be seen as an attempt by insurers to avoid enrolling overweight patients, who are likely to have other health problems.
Insurers may be thinking, “why put out the welcome mat for people, when we can make bariatric surgery optional?” Chollet said.