Sunday, February 17, 2013

Autism Insurance Regulation

The Minnesota House Commerce and Consumer Protection Finance and Policy Committee passed HF.181, which is legislation that would require insurance companies to cover behavioral therapy for children with Autism Spectrum Disorder (ASD), and referred it to the Health and Human Services Finance committee. ASD is a mental health disorder that affects approximately 1 in 88 children in the United States, and the prevalence has increased rapidly over the past two decades. (Look here for a quick overview of ASD). To date, 31 states have passed legislation that prevents health insurance companies from excluding coverage for Early Intensive Behavioral Intervention (EIBI) and other necessary treatments for children with ASD.

This is an important issue both for families who have children with ASD and for Minnesota as a whole. Although appropriate treatment plans vary by child, early identification and intensive behavioral therapies are the most effective known treatments. Beginning with a landmark study by Lovaas in 1987, many researchers have found that, when implemented early in a child’s life, they help as many as 50% of children with ASD achieve a normal IQ and ability to participate in general education settings, obtain jobs, and lead relatively independent lives. Another 40% of children who receive therapy show significant improvement and require less intensive services and supports later in life.

Some insurers do currently provide coverage for behavioral therapy related to ASD, however many families in Minnesota who have private insurance are denied coverage for their children’s mental health treatment after they receive a diagnosis of ASD. This often shifts the burden of paying for therapy, which costs an average of $40,000 per year for 3 to 6 year olds1, to state and county governments in the form of increased use of medical assistance programs, and to families in the form of payment for uncovered services.

States also pay for special education services for children with autism. During the 2011-12 school year, approximately 12% of children receiving special education services were receiving services for autism2, and the estimated cost of special education services is between $15,000 and $30,0003 per student depending on the severity. Beyond age 22 when individuals age out of the public education system, they may need adult care services, and when families are unable to pay, governments often have to intervene. Adult care services cost an estimated $826,2794 per person.

Early intervention can considerably reduce reliance on special education and other costs later in life for individuals with autism. One study found that providing three years of EIBI for a child with autism from ages 3 to 6 would save the state of Texas an estimated $208,500 in special education costs over the next 18 years5 through reduction in the number of children requiring services and lower intensity of services required by children who continue to need services.

Aside from the moral basis for providing early intervention to improve later outcomes, cost savings realized through investing in these treatments for children with ASD makes the necessity of access to these treatments clear. The remaining question is: Who pays? States can realize benefits whether they provide services directly, or require insurance companies to pay for treatment, but whether states should have to pay for treatment when individuals have private insurance is another question. Coverage for behavioral treatments for children with autism has large intrinsic externalities, but that’s a poor argument for allowing discriminatory practices.

One of the reasons the insurance industry is heavily regulated is because of acts of bad faith by insurers. In the case of treatment for autism, individuals pay for coverage, and whether a policy covers behavioral therapy for children with autism isn’t generally something people consider when purchasing a health insurance policy when they do not have a child with autism. Imperfect information, high transaction costs, imperfect and an imbalance of power lead to market failure, which makes government intervention appropriate.

1 Derived from a cost estimate in: Ganz, M. L. (2007). The lifetime distribution of the incremental societal costs of autism. Archives of Pediatrics Adolescent Medicine, 161(4), 343. doi: 10.1001/archpedi.161.4.343. The estimated of behavioral therapy costs from age 3 to 22 was adjusted from 2003 to 2012 dollars using the CPI.

2 Derived from student count data from:

3 From The Cost of Autism: Technical Appendix by Michael L. Ganz (2008).

4 Derived using Ganz’s (2007) cost estimate for adult care costs between ages 3 and 22, also adjusted to 2012 dollars.

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