Bad Bill of the Week: Another Health Insurance Mandate to Drive up Premiums

North Carolina has a hidden tax, and it’s probably the most expensive one you’ve never heard of: It’s called health insurance mandates.

Health insurance mandates are laws that require health insurance companies to pay for something. They force insurance plans offered in the state to cover certain providers, drugs, procedures, etc. Normally, mandates only cover the needs of a small segment of the population, but the high cost of that coverage is spread out evenly over insured individuals, raising premiums across the board.

North Carolina has 57 mandates, more than the majority of states in the country, and as a result our state features some of the highest insurance premiums in the country.  It’s easy to get angry at the insurance company for raising rates, but more difficult to understand how the state is actually forcing them to raise rates.

A new mandate bill, HB 1048, would require health insurance companies to bypass a cost saving measure called “step therapy” and would increase access to what’s known as “abuse deterrent opioids”.

What is step therapy? Step therapy is one way that health insurance companies try to reduce healthcare costs. A step therapy program requires a patient to try the cheaper option before moving on to a more expensive, name-brand drug. According to the Congressional Budget Office, step therapy holds down health insurance premium costs by 5-10 percent.

What are Abuse Deterrent Opioids? Abuse deterrent opioids or opioids with “Abuse Deterrent Formulations”, ADF’s, are opioid drugs with certain characteristics that make them more resistant to crushing, melting, or other methods that make abuse easier.  The drugs are no less addictive, and the Centers for Disease Control (CDC) maintains that there is no evidence that these formulations are effective at preventing abuse.  However, they are 500-1000 percent more expensive than non-abuse-deterrent versions of the drugs.

With all that in mind, HB 1048 would force health insurance companies to exempt ADF’s from the step therapy programs, allowing the more expensive drugs to be used first, without first trying the less-expensive, more readily available formulations of the drug. Such a decision should be left up to the health insurance carriers, and not be forced upon them by government.

State health insurance mandates are proven to increase health insurance premiums, especially on individuals and small businesses.  North Carolina already has more mandates than most states with 57 mandates on the books. Forcing insurers to change how they use step therapy for managing drug costs and exempting ADFs from step therapy will raise costs and provide very little – if any – benefit to a tiny portion of the population. Therefore, HB 1048 is our Bad Bill of the Week.