CAHI Issues: State Mandates
Over the last 30 years, state and federal governments have enacted legislation requiring that health insurers provide coverage, or offer to provide coverage, for specific providers or procedures. The number of health insurance mandates has swelled to over 1,800 nationwide.
Health insurance mandates are laws requiring that a health insurance policy or health plan cover (or offer to cover) specific providers or procedures. While mandates make health insurance more comprehensive, they also make it more expensive because insurers are required to pay for care consumers previously funded out of their own pocket. In some markets, mandated benefits have increased the cost of individual health insurance by as much as 45%. When health insurance costs increase, more people drop or decline coverage.
According to a 1999 study conducted by the Health Insurance Association of America (now part of America's Health Insurance Plans), as many as one in four individuals who are without coverage are uninsured because of the cost of state health benefit mandates. At a time when consumers are counting every dollar, the Council for Affordable Health Insurance (CAHI) believes it is important to recognize that there is a cost to the consumer who is required to purchase a benefit he or she may never use. That cost may be the determining factor in whether or not the consumer can afford health insurance.
Because legislators have saddled health insurance plans with so many mandates, the choice for many people is "Cadillac coverage" or no coverage at all. For this reason, CAHI opposes legislation imposing coverage mandates on health insurers.
Before a state legislature passes a new mandate, it should require a comprehensive cost analysis to assess the mandate’s likely impact on health insurance premiums. And before imposing it on the whole citizenry, the state should include the mandated coverage in state workers policies.
States should also consider making available mandate-free policies as Arkansas, Colorado, Florida, Montana, North Dakota and Utah have done. Such policies would give consumers the peace of mind that comes with knowing they will not be bankrupted by an unforeseen event.
For More Information
"Health Insurance Mandates in the States 2004" - CAHI's newest report on the types of mandates imposed by state governments and their impact on insurance
"Health Care Regulation, A $169 Billion Hidden Tax" - CATO Policy Analysis, October, 2004