This is good news from New York. It is also limited good news as states have limited regulatory power for a huge chunk of the insured population.
New Yorkers receiving Medicaid coverage will not have to pay a co-pay for any testing related to #coronavirus.
Currently all COVID-19 tests being conducted at the State's Wadsworth Lab are fully covered.
— Andrew Cuomo (@NYGovCuomo) March 3, 2020
State regulators have the strongest control over what is known as fully insured plans. These plans are pure risk contracts where the buyer gives the insurance company money every month (premium) and the insurance company takes on full risk of paying claims. The insurance companies make a bundle when people are healthier and cheaper than expected/charged and they lose a bundle when people are sicker than normal. The big regulatory objective is usually to make sure that the insurers can cover all claims. The state regulators use big reserve requirements and fairly conservative actuarial modeling to achieve this goal. The fully insured market is all of the individual major medical market (ACA Qualified Health Plans, Association Health Plans, and underwritten Short Term Limited Duration Plans), significant chunks of the small group market, and elements of the large group employer market.
States also have significant control over the cost sharing in their state employee and Medicaid/CHIP contracts.
However states don’t have a ton of control over what is known as administrative services only (ASO) contracts. ASO contracts have the group (usually employers, sometimes unions) take on all the financial risk. The insurer sells the service of their back-end functions for a monthly per member fee, while being indifferent if the group has big claims or low claims. These ASO contracts are regulated by the 1974 Employee Retirement Income Security Act (ERISA). ERISA pretty much supersedes any state regulatory effort. States can’t impose a benefit requirement.
Minimizing or eliminating the cost to test and treat an infectious disease is a good start, but our legal environment limits the flexibility states have for significant elements of the population past moral suasion.