Merrill Matthews of the Council for Affordable Health Insurance has a great article in today’s Wall Street Journal about how benefit mandates raise the cost of insurance – so there may be great plans out there, but they inadvertently price a lot of people out of the market.
A state can easily increase the cost of a basic health insurance policy by 25%, depending on the number of mandates it has and what they cover. The higher premiums drive some into the ranks of the uninsured.
New Jersey has arguably the highest health insurance premiums in the country, and health insurance mandates (the state currently has 45, about average for the country) are one reason.
In the early 1990s, New Jersey also passed legislation requiring insurers to accept all applicants, regardless of their health status (guaranteed issue) and charge them all the same price (community rating). President Barack Obama wants to do the same thing nationally.
There were repeated warnings that such legislation would drive up health insurance premiums. But New Jersey legislators ignored those warnings. Today, New Jersey residents have relatively few health insurance options, and coverage is significantly more expensive than in most other states. Just across the state line in Pennsylvania, for instance, a family can buy a comparable insurance policy for a quarter to half the price.
He notes that many employers exempt from such rules do so voluntarily because it makes good business sense.
After all, not requiring health insurers to cover mammograms doesn’t mean they won’t. Large employers that “self-insure” (meaning they pay claims themselves, even though an insurer may handle the paperwork) come under federal, not state, law, and so are not subject to state mandates. And yet most employer-based plans cover mammograms without a government mandate. Why? Because it saves money and lives in the long run.
If Democrats were really concerned with helping the poor, they would seriously consider sustainable reforms that would drive down the cost of insurance across the board – WITHOUT gimmicks like subsidies or tax breaks that create the mere illusion of affordability.