Consumers shopping for health 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 gastric bypass or bariatric surgery will have to pay up to $1,500 a month more for plans that cover the procedure.
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 because that state requires all plans to pay for it. In the District, insurers are not required to offer the surgical treatment, either as a rider or a standard benefit. The procedure can cost $15,000 to $25,000.
The difference between the approaches in Virginia and Maryland reflects some of the reasons for the broad variation in prices and benefits among policies offered under the federal health law.
Debates about how much to require insurers to cover and where to draw the line have long roiled state capitals 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 of consulting firm Avalere Health. “Legislatures have to make a call on whether something is a necessary medical intervention or just something nice to have.”
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 individuals are governed by state rules, so coverage varies. The procedure, which makes the stomach smaller, is one of a number of treatments offered to patients who are severely overweight. About 200,000 such surgeries are performed annually.
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 plan selected by Virginia officials as the standard for what must be sold through the new marketplaces.
Virginia’s pricing “is a barrier for people getting coverage,” said Joe Nadglowski, president and chief executive 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.
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 surgery, according to an analysis by the obesity coalition.
Maryland chose a benchmark plan that requires coverage, reflecting a long-standing law. A Maryland Health Care Commission report from 2012 estimates the mandate to cover treatment for severe obesity added 0.4 percent to the cost of an individual policy, far below what is seen in some of the plans in Virginia.
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, though.
“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 nonessential 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.”
Kaiser Health News is an editorially independent program of the Henry J. Kaiser Family Foundation, a nonprofit, nonpartisan health policy research and communication organization not affiliated with Kaiser Permanente.