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Affordable Care Act: State Rules Can Boost Costs

WebMD News from Kaiser Health News

By Julie Appleby

Fri, Oct 11 2013

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.  

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