Michael F. Ryan


Prior to the enactment of the Patient Protection and Affordable Care Act (ACA), state legislatures routinely passed laws requiring health insurance carriers to cover certain health care services or providers. At the behest of the insurance industry, Congress attempted to use the health reform law as a vehicle to reign in state-specific “mandated benefit” laws. That being said, the ACA does not prevent states from enacting mandated benefit laws; in fact, the statute expressly permits states to enact such laws. Instead, Congress created a significant barrier to continued state-specific regulation of health insurance benefits. Specifically, 42 U.S.C. § 18031(d)(3)(B)(ii) (Section 1311(d)(3)(B)(ii) of the Act) requires states to “defray” the cost of any mandated benefit that exceeds the federally defined “essential health benefits” (EHB) package. In other words, were a state to enact a mandated benefit law that requires coverage for a benefit or service not included in the EHB package, the state would be legally obligated to appropriate state general revenue to either the individual subscribers or health plans to cover the cost of that benefit. In an apparent attempt to forestall state level health insurance regulation, Congress exacted a financial penalty from states for performing their essential role as the primary regulator of the insurance industry. This article will explore the constitutional implications of this ACA innovation.



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