Mandate Update
08 02 08 - 12:11
By VICTORIA C. BUNCE and J.P. WIESKE
February 8, 2008; Page A17
To hear some of the presidential candidates, you'd think that health-insurance companies are the driving force behind the growing cost of health insurance. The more likely culprits are our politicians and the laws they pass.
Since the early 1990s, the Council for Affordable Health Insurance (CAHI) has tracked state health-insurance mandate legislation in all 50 states, and our actuarial team estimates the impact of those mandated benefits on the cost of a policy.
A health-insurance "mandate" is a legislative requirement that an insurance company or health plan cover (or offer coverage for) common -- but sometimes not so common -- health- care providers, benefits and patient populations. They include:
- Providers such as chiropractors (mandated in 46 states) and podiatrists (35 states), but also massage therapists (four states) and naturopaths (four states);
- Benefits such as mammograms (50 states) and drug abuse treatment (34 states), but also morbid obesity treatment (four states) and wigs for cancer patients (10 states);
- Populations such as dependent students (30 states), but also grandchildren (four states).
Although there were only a handful of state mandates in the 1960s, CAHI's just released "Health Insurance Mandates in the States, 2008" has identified 1,961 nationwide -- up from 1,901 a year ago.
For almost every health-care product or service, there are at least two groups that want insurance to cover it: those who sell the products and services so they can get more business, and those who use the products and services to lower their out-of-pocket costs. Both of these highly motivated groups push state legislators -- and increasingly members of Congress -- to require insurance to cover the care. As a result, government interference in and control of the health-care system is steadily increasing -- and so is the cost of health insurance.
Mandate proponents often claim that covering a particular medical product or service actually lowers health-care costs, because either the proposed coverage costs less than the standard of care (for example, a chiropractor or podiatrist usually charges less than a medical doctor), or the service will reduce or avoid future medical costs.
To be sure, some health-care services such as vaccines and mammograms can be very cost effective, especially when targeting certain at-risk groups and individuals. And many of the mandates we identify would normally be included in a comprehensive health-insurance policy.
But the fact is that mandates almost always raise the cost of health insurance. That's because mandates require insurers to pay for care that consumers previously funded out of their own pockets, if they purchased it at all.
Although most mandates will have a relatively small impact when taken individually, it's the cumulative effect that drives up the cost of coverage. It's like telling people they must have a "Cadillac plan" loaded with options. Cadillacs are nice, but not everyone can afford one. And when people can't afford coverage, they join the ranks of the uninsured.
Mandates also limit choices. Why should an older couple nearing retirement pay for maternity coverage, or a teetotaler pay for drug and alcohol abuse counseling?
One of the things you notice when tracking mandates over time is that some mandate legislation catches on. For example, over the past several years we have seen a steady increase in the cervical cancer/human papillomavirus (HPV) vaccine mandate. In the last state legislative session, at least 41 states introduced legislation to mandate coverage for this vaccine, and 24 states introduced legislation to mandate the HPV vaccine as part of the school entrance vaccine list.
Another trend is the "eligibility" mandates. Health insurance typically allows dependents to stay on a policy during their college years. But some states are increasing dependent eligibility up to age 30, regardless of student status. As a result, some commonly refer to this mandate as the "slacker mandate."
In addition, we are seeing new eligibility categories emerging, such as "domestic partner," "legal alien," "elderly parent," "grandchild" and "U.S. armed services personnel." All of these are attempts to force insurers to cover people under someone else's existing policy.
Such micromanaging of benefits is unique to health insurance. State legislators aren't nearly as aggressive in controlling life, property and casualty, and even auto insurance. As a result, those insurance markets function better and provide consumers with more choices.
Fortunately, a few states are recognizing that mandates make health insurance more expensive. At least 10 states now permit mandate-lite policies, which allow individuals to purchase a policy with fewer mandates and so are more tailored to their needs and financial situation. And there are now at least 30 states that require a mandate's cost to be assessed before it is implemented.
Mandates aren't the only things driving up the cost of health insurance. States that require insurers to accept any individual who applies, regardless of their health status, are imposing costly burdens on health insurance. And those costs get passed on to consumers -- if they decide to keep their coverage.
Before politicians jump on the anti-health-insurance bandwagon, they should look at the role they are playing in driving up costs. Making health insurance more affordable would be a lot easier if they would stop legislating what it has to cover.
Ms. Bunce is research and policy director at the Council for Affordable Health Insurance. Mr. Wieske is director of state affairs at CAHI.