Cost Projections

  • PriceWaterhouseCoopers recently issued its healthcare cost projection for 2008. PwC expects those costs to grow at a slower, likely single digit rate.
  • Milliman presented its actuarial projection of the costs of the House mental health parity bill (HR 1424) at a House Education and Labor Committee hearing held on July 10. The Milliman study which was commissioned by a collection of mental health provider associations, finds very little increase in health plan expenses as a result of this bill. An interesting aspect of the House bill is that the bill “defines a minimum scope
    of coverage for mental health and substance-related disorders as the same range of mental
    illnesses and addiction disorders covered by the health plan with the largest enrollment of
    federal employees (under chapter 89 of title 5, United States Code, [the FEHB Act]),” which is the Blue Cross FEP Standard Option.” Also testifying at this hearing was a representative of the American Benefits Council, a trade association of large employers and insurers, who offered support for the Senate mental health parity bill over the House bill for the following reasons:

    First, the Senate proposal does not mandate that health plans cover specific
    mental health benefits. It leaves those decisions up to employers. In the case of
    fully insured health plans, however, the Senate bill permits States to continue to determine whether to require any particular benefits.

    Second, the Senate bill includes a provision making clear that medical
    management of mental health benefits is not prohibited and preserves flexibility for employers and health plans in the formation of networks of health care providers who deliver these services. These provisions are vitally important because they allow employers to appropriately design and manage the health coverage they offer to meet their employees’ needs.

    Finally, the Senate bill provides for a very targeted and narrow preemption of
    State insurance law (applicable to fully insured plans, as well as to self-insured
    plans) that assures a uniform federal rule for the specific parity requirements of S. 558 (e.g., treatment limits, financial requirements, cost exemption).

    Of course, as previously noted in the FEHBlog, the managers of the Senate bill have developed a “mark” that narrows the gap between the two bills while maintain broad industry support according to reports. I just hope the mental health parity law does not disrupt the FEHB Program’s successful mental health parity initiative.