From Tuesday’s Boston Globe:
A long-awaited report concludes that 12 cents of every $1 paid for health insurance in Massachusetts goes toward 26 state-mandated benefits, from maternity and mental healthcare to infertility and diabetes services….
Insurers and small business groups said the findings show that mandates are helping to drive up costs, making coverage unaffordable as many businesses and workers struggle….
State lawmakers are now considering proposals that could require employers to add more benefits, including expanded mental healthcare coverage….
The report’s authors reviewed health studies about the various mandates and estimated that most of them are cost-effective. But they suggested that regulators may consider removing some that are not considered the standard of care, such as bone marrow transplants for treatment of breast cancer. The report also noted that just five of the mandates – maternity, mental health, home health, preventive care for children, and infertility services – account for 80 percent of the total cost of the mandated benefits….
Regardless of whether the mandated benefits are cost-effective, including them in plans is rightfully up to the insurance companies and the preferences of the customers for whom they design products. (They would have to do this more if the tax code did not favor employer-sponsored insurance.)
That “maternity, mental health, home health, preventive care for children, and infertility services,” “account for 80 percent of the total cost of the mandated benefits” is also noteworthy. Three of these concern having children, which, unlike illness and accidents, responsible adults choose, or choose to forgo (the failure rate of birth control notwithstanding), and hence avoid the related risks.
The article continues:
The report did not calculate the cost of mandatory prescription drug coverage, which is being phased in this year.
Small business owners say that that mandate alone is likely to boost costs by another 3 to 4 percent.
“Legislators think companies are all big businesses who can afford to pay, and that’s not true,” said Bill Vernon, state director of the National Federation of Independent Business, which represents small business owners.
Vernon said small business owners are bearing the brunt of the state mandates because most larger companies are exempt from state insurance rules under federal law.
He said healthcare costs are typically the second- or third-largest employer expense and that mandates make it tough for small companies to tailor their coverage to the benefits that would most help their employees.
“Perhaps the employees want something else, like higher pay or more 401K contributions,” he said. “It’s the [lack of] flexibility that really irritates small business owners.”
(via Michael Cannon, whose comments are also worth reading.)