The cost of state-required health insurance benefits is bumping up against a statutory affordability ceiling, according to a report yesterday to the Maryland Health Care Commission.

Under a 1999 law, the benefits' cost per policy was limited to 2.20 percent of the state's average annual wage. This year the cost of required benefits, generally known as mandates, is a hair below that, the report concluded, at 2.19 percent of the average wage - or $841 per year per policy.

"This is becoming a crisis," Gerard Petrik, the commission's chief of benefits and analysis, said in presenting the report.

Coming close to the ceiling doesn't trigger any action, but if the cost exceeds 2.20 percent next year, mandates would be frozen while the commission conducts a detailed study of the cost and benefits of each, said Barbara McLean, executive director of the health care commission.

And, the report said, given that health care costs are rising faster than wages, the ceiling is likely to be pierced next year, even without adding new benefits.

Approved by lawmakers over a number of years, the current 25 mandates require insurers to pay for a variety of medical services, ranging from conception (in vitro fertilization) to death (hospice care). They apply to most health policies sold in the state, although large self-insured employers are federally regulated and exempt from state mandates. Also, some of the mandates apply only to specific types of policies.

McLean said the commission is not recommending cutting benefits or raising the ceiling - those decisions are up to the legislature.

However, she said, a detailed study is likely to cost $300,000 or more, so the commission's report will ask the legislature to consider whether it will want to spend that much a year from now.

The report, prepared for the commission by Mercer Human Resource Consulting, could serve as evidence for business groups seeking to persuade legislators to reduce the number of mandated benefits.

For example, Robert O.C. Worcester, president of Maryland Business for Responsive Government, said yesterday that mandated benefits "increase the cost of insurance, which could drive business out of the business of providing health care and add to the number of people without coverage."

While Worcester said he hopes that mandates will get a close look, Del. Michael E. Busch, chairman of the House Economic Matters Committee, said he doesn't think there's a legislative consensus for cutting back on benefits.

Busch said most mandates were enacted when legislators felt "the insurance industry was in a race to the bottom."

Services such as breast reconstruction surgery and diabetes medication, he said, were mandated because insurers were not paying for needed care.

The report found that Maryland has more mandated benefits than do neighboring states, which could put Maryland businesses at a cost disadvantage.

However, the report said, the two most expensive mandates, coverage for mental health treatment and a minimum two-day maternity stay, are similar in other states.

Those two benefits, the report said, account for $394 in costs per policy per year. Most others are much less costly, such as $28 per policy per year for mammograms, $11 for contraceptives and $7 for colorectal cancer screening.