Prescription Drug Coverage, The Uninsured Top Agendas of State Legislatures; BCBSA's Annual States Report Released

2/14/2002

From: John Parker of the Blue Cross and Blue Shield Association, 202-626-4818

WASHINGTON, Feb. 14 -- Access to affordable prescription drug coverage and efforts to provide health insurance for uninsured, low-income families topped the agendas of state legislatures around the country this past year, according to a new analysis of state legislation from the Blue Cross and Blue Shield Association (BCBSA). The analysis is contained in BCBSA's 9th annual State Legislative Health Care and Insurance Issues: 2001 Survey of Plans, also known as the "State of the States" report.

"Once again the "State of the States" report demonstrates that the most contentious issues facing the states are also among the most hotly debated issues in Washington -- prescription drug coverage and the uninsured," said Scott P. Serota, president and CEO of BCBSA. "States are enacting unique approaches to enhance the affordability and accessibility of healthcare for their citizens and in many ways providing a road map for us as we attempt to do the same at the national level."

To develop the "State of the States" report, BCBSA surveys each of the 43 independent BCBS Plans at the close of the state legislative sessions to assess the leading issues of the year. The survey highlights major health legislation enacted in 2001 and identifies the most significant trends for the Plans in 2002.

Key results from the 2001 "State of the States" report include:

-- Pharmacy Access and Pricing "Policymakers in nearly every state have been tackling the difficult challenge of how to make prescription drugs available to all Americans," said Susan Laudicina, director of BCBSA's state services research and author of the report. Legislators in 13 states approved a variety of programs to improve access to prescription drugs for targeted populations or to moderate the escalating costs of drugs.

In New England, the nation's first multi-state prescription buying pool was formed by the states of New Hampshire, Maine and Vermont. Under this innovative program, the coalition will pool state Medicaid funds and contract with a private pharmacy benefits manager to negotiate discount prices with drug manufacturers. Similar bulk purchasing agreements currently are being explored by regional state coalitions in the South and the Northwest.

-- Expanding Coverage for the Uninsured A number of states found the political will and the resources to significantly expand access to their uninsured residents. Overall, 19 states enacted legislation on this front last year.

Minnesota, New Jersey, Rhode Island and Wisconsin received federal waivers allowing them to cover parents of children eligible for the Children's Health Insurance Program (CHIP). Two other states -- Montana and Utah -- authorized the payment of premium subsidies for low-income enrollees in the state medical high-risk pool. Idaho created a tax deduction for all individuals who purchase their own coverage.

-- Regulating Health Insurers In 2001, considerable debate was devoted to legislation that would extend liability for damages to healthcare plans. However, while nearly half of the states considered liability proposals, only four states enacted them.

Prompt payment legislation continued to be a high priority in the states during the 2001 legislative session. Thirty-one states introduced bills that would either clarify the application of current guidelines, stiffen existing standards or adopt new ones, and 15 enacted such legislation. The total number of states with prompt pay laws or regulations has now reached 48.

An emerging and troublesome issue in 2001 was legislation that requires health plans to make direct payments to non-participating providers. While passage of such legislation represents a windfall for providers, it has serious adverse consequences for consumers: (1) higher out-of-pocket expenses due to balance billing; (2) reduced choice because providers will have little incentive to join networks; and (3) reduced access to care.

Medical privacy issues, often focused on genetic information and testing, have generated tremendous activity in state legislatures over the past several years. In 2001, privacy efforts intensified due to the federal Gramm-Leach-Bliley Act (GLBA). The GLBA established notice and disclosure rules regarding individuals' financial and health information used by financial institutions, including insurers. The states were charged with promulgating rules for insurers. Currently, all but a handful of states have enacted rules consistent with GLBA requirements.

-- Restraining Mandated Health Benefits During 2001, special interest groups continued to lobby lawmakers for mandated coverage requirements with some success. For instance, several states enacted mandates to cover a limited type of mental health parity, while others required coverage for contraceptive drugs and devices. However, a countervailing trend emerged as seven states took action to curb the proliferation of mandated health benefits by requiring that cost-benefit analyses be performed.

-- Prospects for State Legislation in 2002 "There is a new sense of urgency about healthcare inflation and its impact on the uninsured," said Laudicina. "Rising costs, coupled with the economic downturn, are decimating state budgets and threatening the many advances previously made by states."

The following developments are likely in 2002:

States will continue efforts to expand prescription drug coverage to needy residents and to moderate drug costs through such means as interstate purchasing alliances and price setting. These initiatives will take on a special urgency if Congress fails to enact outpatient prescription drug coverage under Medicare.

Provider groups will pursue special interest legislation that would require health plans to make direct payments to non-participating healthcare providers, with potentially harmful effects on consumers.

Health plan liability legislation will continue to be championed by the trial bar and medical establishments in selected states, but will face an uphill struggle due to cost concerns.

The Blue Cross and Blue Shield Association is composed of 43 independent, locally operated Blue Cross and Blue Shield Plans that collectively provide healthcare coverage to 82 million -- one in four -- Americans. For more information on state legislative activities, or for a copy of the "State of the States" report visit http://bcbshealthissues.com/. For more information about BCBSA, visit http://www.bcbs.com/.