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F I S C A L I M P A C T R E P O R T

SPONSOR HCPAC

DATE TYPED 3/3/05

HB HJM 43/HCPACS

SHORT TITLE Insurance Industry & Contraceptive Use

SB

ANALYST Wilson

APPROPRIATION

Appropriation Contained Estimated Additional Impact Recurring

or Non-Rec

Fund

Affected

FY05

FY06

FY05

FY06

($0.1)

SOURCES OF INFORMATION

LFC Files

Responses Received From

Department of Health (DOH)

Health Policy Commission (HPC)

Human Services Division (HSD)

Public Regulation Commission (PRC)

Public School Insurance Authority (PSIA)

SUMMARY

Synopsis of Bill

The House Consumer and Public Affairs Committee substitute for House Joint Memorial 43 re-

quests the HPC in coordination with the Insurance Division (ID) of the PRC to evaluate the

benefits of contraceptive use, disseminate insurance coverage information to the public and up-

date the study of the insurance industry’s compliance with requirements to offer coverage for

prescription contraceptives.

The memorial asks the HPC to do the following:

o

to collect and evaluate relevant health studies and other information and determine the

benefits to the state, its people and the health insurance industry of having prescription

contraceptive coverage;

o

to prepare educational materials for the public regarding availability and access to pre-

scription contraceptives in cooperation with DOH; and

House Joint Memorial 43/HCPACS -- Page 2

o

to serve as the lead agency to coordinate efforts with the insurance division and provide

two copies of the report generated pursuant to this memorial to the library of the legisla-

tive council service.

The memorial also asks the ID of the PRC to do the following:

•

to update its 2002 survey of health insurers;

•

to update its 2002 survey of health insurers and report to an appropriate legislative com-

mittee no later than November 2005;

•

to ascertain if the level of knowledge of and compliance with the requirement to offer

coverage of prescription contraception has increased and also determine if there are limits

placed on the varieties of contraception that are covered by private insurers;

•

to extend the focus of the 2003 study to ascertain whether prescription contraceptives are

covered by insurers that offer hospital and medical expenses reimbursement and managed

care contracts;

•

to prepare a list for public dissemination of health insurers that do not provide prescrip-

tion contraceptive coverage;

•

to use the data collected as a result of the survey to begin a dialog with insurance compa-

nies to encourage greater coverage of prescription contraceptives; and

•

to report to an appropriate legislative committee no later than November 2005.

Significant Issues

Current law requires health insurance providers that offer a prescription benefit to offer coverage

for prescription contraceptive drugs or devices. This law took effect June 15, 2001 and applies

to policies issued, extended or renewed after July 1, 2001.

In 2002, the superintendent of insurance conducted a survey of insurers to determine who pro-

vides prescription coverage for contraceptives. The survey found that of five hundred eighty-

nine health insurers surveyed, fewer than ten percent, or forty-seven insurers, offered coverage of

prescription contraceptives. An update of the survey is needed to determine what type of insur-

ance polices do not provide coverage.

There is a concern that the data from the first survey may be imprecise and may reflect special

insurance coverage that would not offer any prescription coverage. It is important to ascertain

whether insurers that offer regular outpatient coverage include prescription coverage for contra-

ceptives.

For individual women who need contraception over long periods of their life, the costs can be

significant. Some of the most effective methods require concentrated payments: $50-115 for the

three-month injectable and $175-400 to insert an IUD. Not all women in need can afford to pur-

chase these services and supplies on their own. This is problematic because it may dissuade

House Joint Memorial 43/HCPACS -- Page 3

women from using the method that is most effective or appropriate for them. Cost may lead

women to delay getting a refill or an injection, which in turn could lead to unintended pregnancy

among those nominally using a method.

Considerable cost-savings resulting from public-sector investments in contraceptive services

have been extensively documented. Public-sector expenditures for contraceptive services in FY

1987 totaled an estimated $412 million. If these subsidized services had not been available, the

federal and state governments would have spent an additional $1.2 billion through their medicaid

programs, including the costs of unplanned births. Thus, for every dollar spent in the public sec-

tor on contraceptive services, three dollars are saved in medicaid costs for pregnancy-related

health care and medical care for newborns.

Research and experience now suggest that contraceptive coverage saves employers money

through reducing the direct costs associated with normal deliveries as well as the indirect costs

associated with employee absences, maternity leave and pregnancy-related sick leave.

Recent research also indicates that plans in states with contraceptive coverage mandates are more

likely than plans in states without mandates to cover a full range of contraceptives in 2002.

Among women giving live birth in 2001-2002, New Mexico Pregnancy Risk Assessment Moni-

toring System (PRAMS) estimated that 43.3 % of pregnancies were unintended. 43.5% of

women who did not want to get pregnant were using some form of contraception, indicating lack

of access to effective contraceptive methods or failure to use a method correctly.

This information reflects barriers to women’s access to timely medical management including

contraceptive use counseling, and availability and cost of the chosen method. This illustrates that

lack of prescription coverage may hinder a woman’s ability to use contraception devices or pills

effectively. An estimated 206,600 women in New Mexico, including 33,120 teenagers are in

need of contraceptive services and supplies.

FISCAL IMPLICATIONS

HSD indicates if more private insurance plans pay for prescription contraceptives, it may possi-

bly result in cost savings to the medicaid program

ADMINISTRATIVE IMPLICATIONS

The insurance division will have to update its 2002 survey of health insurers and report to the

legislature.

DOH and the ID will have to prepare educational materials for the public regarding availability

and access to prescription contraceptives.

DW/yr:lg