Spillover Effects of State Mandated Benefit Laws: The Case of Outpatient Breast Cancer Surgery

Article excerpt

This paper examines the "spillover effects" of state laws that mandate inpatient coverage for breast cancer surgery. It looks at outpatient utilization of two types of breast cancer surgery among Medicare fee-for-service patients', who are exempt from state regulation. Using data from the Surveillanee, Epidemiology and End Results cancer registries and Medicare claims, we performed difference-in-differences analyses of patients in nine states from 1993 to 2002. The analyses show that state laws had a significant impact on only the likelihood of outpatient mastectomy, which was reduced by five percentage points. Such a spillover effect may diminish the expected impact of federal coverage laws for inpatient breast cancer surgery, which have been proposed to achieve similar ends.

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Mandated benefit laws require health insurers to cover specified services such as a 48-hour hospital stay after delivery of a baby or reconstructive breast surgery after mastectomy (Laugesen et al. 2006). When adopted at the state level, these laws formally apply only to health insurance plans that are subject to state insurance regulation. They do not cover federal insurance programs, such as Medicare and Medicaid, Medigap plans, or employer-sponsored plans that fall within the purview of the federal Employee Retirement Income Security Act (ERISA).

Although states have been quite active in passing mandated benefit laws, many commentators have argued that federal mandates are needed to ensure that patients in ERISA plans, and patients in states without mandated benefit laws, enjoy the same protection as patients in plans covered by the laws (Laugesen et al. 2006). However, evidence suggests that patients whose plans are not formally covered by mandated benefit laws may nonetheless receive the laws' intended protection via so-called "spillover effects." For example, state "drive-through delivery" laws requiring coverage for a minimum hospital stay after childbirth indirectly influenced care received by patients enrolled in ERISA plans (Liu, Dow, and Norton 2004: Dow, Harris, and Liu 2006). As a result, the 1996 federal drive-through delivery law may have generated little additional benefit. Thus, the extent to which state mandated benefit laws entail spillover effects on nonregulated populations has implications for any debate on federal legislation.

In the last decade, there has been a significant legislative focus on mandates aimed at curbing use of the controversial practice of "drive-through," or outpatient, breast cancer surgery (Case, Johantgen, and Steiner 2001: Warren et al. 1998: Sinks and Zarfos 1998). The growing prevalence of outpatient breast cancer surgery, particularly outpatient mastectomy, attracted widespread public attention in 1997, when its potential dangers were mentioned in President Clinton's State of the Union Address (Clinton 1997). Although proposed federal legislation requiring insurers to cover a minimum hospital stay for mastectomy and breast-conserving surgery with lymph node dissection (BCS/LND) has yet to succeed, many states have adopted similar provisions since 1997 (National Cancer Institute 2007). The 110th Congress again considered the merits of adopting a nationwide mandate, the Breast Cancer Patient Protection Act of 2007 (H.R. 758 and S. 459).

The available evidence regarding the effects of state mandated benefit laws is limited. The two existing multistate, longitudinal studies of state drive-through delivery laws are ex post analyses, examining the effect of the laws alter the federal law had already gone into effect (Liu, Dow, and Norton 2004: Dow, Harris, and Liu 2006). In this paper, we conducted an ex ante analysis of state mandated benefit laws for breast cancer surgery to inform the ongoing debate about the federal Breast Cancer Patient Protection Act. Using a natural experimental design, we examined the spillover effects of state laws mandating inpatient coverage for mastectomy and BCS/LND on the utilization of outpatient breast cancer surgery by patients enrolled in Medicare fee-for-service (FFS) plans, which are exempted from state regulation. …