Fix Health Care Policy

Democrats have promised Americans an extensive health insurance benefit package—one as good as that held by members of Congress. They also want to move much of the regulatory power over health insurance markets from the state level, where it currently lies, to the national level.

To see what this would mean in practice, let’s turn to the states. Among the regulations states enact are benefit mandates, which outline the specific treatments that must be covered in all plans offered in a state.

As researchers at the Council for Affordable Health Insurance write:

“While mandates make health insurance more comprehensive, they also make it more expensive because mandates require insurers to pay for care consumers previously funded out of their own pockets. We estimate that mandated benefits currently increase the cost of basic health coverage from a little less than 20% to perhaps 50%…”

The “consumer protection” of a rich benefit package mandated nationwide would actually drive up insurance costs. Moreover, our political system creates pressures for politicians to enact mandates:

“Elected representatives find it difficult to oppose any legislation that promises enhanced care to potentially motivated voters. The sponsors of mandates know this fact of political life…By the late 1960s, state legislatures had passed only a handful of mandated benefits; today, the Council for Affordable Health Insurance (CAHI) has identified 2,133 mandated benefits and providers. And more are on their way.”

It is likely that the federal one-size-fits all benefit package, as proposed in the bills moving through Congress, will end up resembling a state like Massachusetts (with 52 total mandates) rather than one like Utah (with only 23 mandates). The Democrats’ reforms would mean more mandates and higher—not lower—health insurance costs.

Tags: consumer protection, employer mandates, Massachusetts, Utah