Rising health insurance costs in Massachusetts, where possession of insurance is required by state law, are in large part attributable to onerous mandatory minimum coverages the state government requires in every policy sold in the state, a new state government study shows.
An assessment conducted by the Massachusetts Division of Health Care Finance and Policy (MDHCFP) found 12 cents of every $1 spent on insurance premiums in the state goes toward paying for those mandated benefits–a cost to consumers of more than $1.3 billion per year.
Massachusetts law requires every health insurance plan to cover 26 specific treatments and procedures, including alcoholism counseling and hair prosthesis, according to the Council for Affordable Health Insurance.
Dr. Marylou Buyse, president of the Massachusetts Association of Health Plans (MAHP), says the coverage mandates affect consumers–who have to pay higher premiums, co-pays, and deductibles– and also “have an impact on the employers who are required to provide health insurance plans.”
Kalese Hammonds, a policy analyst at the Texas Public Policy Foundation’s Center for Health Care Policy, agrees. “Providing health care is already a burden for employers, particularly small employers who are subject to state regulations,” she said.
“The additional regulations that Massachusetts puts on health insurance plans will make the policies more expensive and even more burdensome for small employers,” Hammonds added. The burden makes employers financially unable to give their employees raises and prevents companies from investing in their own businesses, she noted.
Dictating Policy Structures
“Rather than allowing individuals to make their own decisions, elected officials have dictated the structure and benefits of health insurance policies through legislative mandates,” said Hammonds. “Unfortunately, these mandates arbitrarily inflate the cost of health insurance, making even a basic plan too expensive for consumers and forcing them to rely on the government to provide these benefits or forego coverage altogether.”
Maternity, mental health, home health, preventive care for children, and infertility services account for 80 percent of premium spending on mandated coverages, according to the MDHCFP assessment.
Health policy analysts note mandates mean many consumers are paying for benefits they may never need or want.
“They are absolutely paying for it,” said Buyse. “That is what a mandate does: It forces someone to pay even if they don’t want it. It also reduces flexibility in the market.”
Buyse said MAHP opposes new mandates. The organization wants a multi-year moratorium on mandates until the spiraling cost of health care is under control.
“Any time we add a new mandate it increases the cost for employers and consumers,” said Buyse, “and that runs counter to the need to control health care costs.”
Elisha Maldonado ([email protected]) writes from California.
For more information …
“Comprehensive Review of Mandated Benefits in Massachusetts,” Massachusetts Division of Health Care Finance and Policy, July 2008: http://www.heartland.org/article.cfm?artId=23617
“Health Mandates in the States 2008,” Council for Affordable Health Insurance: http://www.heartland.org/article.cfm?artId=23616