San Francisco, July 1, 2008 – The Pacific Research Institute today released the findings of a new report reviewing the impact of state benefit mandates on the uninsured. According to From Heart Transplants to Hairpieces: The Questionable Benefits of State Benefit Mandates for Health Insurance, benefit mandates increase health insurance premiums, reduce wages, increase working hours for employees, and deprive some workers of health benefits altogether.
A benefit mandate is a state law that requires a health plan to pay for, or at least offer, a specified treatment or type of provider, removing the benefit from negotiation between beneficiaries and health plans. For example, a mandate may require a health plan to cover treatment of alcoholism, or chiropractic services.
John R. Graham, director of Health Care Studies and author of the study, concluded that roughly one additional benefit mandate explains an increase in the number of uninsured by about .25 percent. “While the evidence shows that state benefit mandates increase the number of uninsured, inconsistencies in the data make it difficult to measure the exact magnitude of the impact.”
In 2007, there were 1,594 state mandates, averaging 32 mandates per state. This marks a significant increase from 1979, when there were just 252 mandate laws in force – an average of only five per state. Among the benefit mandates introduced since 2000 are: hearing aids, hormone replacement therapy, and reimbursement for clinical trial participation.
In California alone, 10 new benefit mandate bills being considered in the legislature would cost Californians $2.7 billion in the first year in the form of premium increases for private plans and taxpayer funding for CalPERS (the public employees’ benefit fund) and MediCal (Medicaid). This is a potential increase of 3.6 percent in California’s health care costs according to the California Health Benefits Review Program.
Clearly, state mandates are on the rise,” said Mr. Graham. “Lawmakers, with the best of intentions, want to assure that their constituents get access to care. Unfortunately, these benefit mandates are adding to the problem of the uninsured. The design of health insurance is far too complex to be done by politicians. Decades of experience with benefit mandates have shown that they are expensive, and do not improve access to care. It’s prudent that politicians should exercise restraint in establishing mandated benefits, and let employers, individuals, and health plans spend health care dollars on health care that they decide is beneficial, not health care that politicians favor.”
Contact:
To download the study, please visit www.pacificresearch.org. To schedule an interview with John R. Graham, please contact Brenda Buhler at 415.955.6139 / [email protected] Rowena Itchon at 415-955-6123 / [email protected].
About PRI
For 29 years, the Pacific Research Institute (PRI) has championed freedom, opportunity, and individual responsibility through free-market policy solutions. PRI is a non-profit, non-partisan organization. For more information please visit our web site at www.pacificreseach.org
