by Katherine Restrepo
Director of Health Care Policy, John Locke Foundation
SCOTUS may have saved Obamacare from having to operate as written, but the landmark decision on King v Burwell has not deterred those on the right side of things from focusing on making health insurance (and more importantly health care) more affordable for more Americans.
Doing away with many of Obamacare’s expensive regulations imposed on patients, providers, and insurers ultimately falls on Congress. State lawmakers can only do so much to slow the rise in health insurance costs. One thing they can do, however, is to re-examine the number of state health coverage mandates licensed insurance carriers must offer. Such laws require insurers to offer or expand upon specific services that benefit particular populations and providers.
North Carolina currently imposes over 55 coverage mandates — ranking in the top 15 states nationwide. The Council for Affordable Health Insurance estimates that each additional mandate increases premiums by an average of less than one percent, so the impact of any individual one seems small. Consequently, additional coverage requirements are passed here and there, and collectively they contribute to rising premiums. The fact that there are now over 2,200 mandates nationwide — up from almost zero in 1970 — demonstrates that it’s generally politically feasible for special interest groups to get their way.
Throughout North Carolina’s present legislative session, a number of bills have been filed calling for insurers to expand coverage to include benefits such as oral cancer drugs, autism therapy, and reduced co-pays for chiropractic care. The Citizen Times reports that the introduced bills could amount to an additional 16 percent rate increase if passed. Keep in mind this doesn’t factor in a potential 25 percent average premium increase Blue Cross and Blue Shield seeks for 2016 individual policy plans:
Rep. Gary Pendleton, R-Wake, an independent insurance agent handling employer health plans, stressed in an interview his sympathy for people with health needs seeking help. But he estimated that approving five pieces of pending legislation he considers mandates would increase insurance premiums by about 16 percent.
"It’ll be a rate increase on everybody insured whether they use that benefit or not," Pendleton said, adding that even with the GOP protests about President Barack Obama’s health care law, "my fellow Republicans are not serious about reducing health care costs for corporations and nonprofits."
Proponents make the case that certain mandates like autism services curb overall health care expenditures in the long run. You can read more about this issue in my colleague Dan Way’s Carolina Journal article here. The Council of Affordable Health Insurance also cautions:
It is easy to assume states with the most mandates have the most expensive insurance premiums. While that may be true in some states, it is not necessarily so. Some mandates have a more pronounced effect on premiums than do others. For example, a mental health parity mandate, which requires insurers to cover mental health care at the same levels as physical health care, has a greater impact on the cost of premiums than a collection of mandates for inexpensive procedures utilized by relatively few people.
Curiously, businesses that self-insure (approximately 60 percent of North Carolina’s private firms) and the state government are let off the hook by the blessing of the 1974 Employee Retirement Income Security Act (ERISA), so they don’t have to meet all of the 55 state mandates. Unfortunately, this self-insured exemption puts an extra burden on everyone else — mostly non group policyholders and small businesses who fully purchase health plans for their workers. A recent study published by the Mercatus Center finds that while more coverage mandates do not necessarily reduce employment, it does cause an employment shift from small to large businesses. Consequently, the authors perceive this market distortion as an overall decrease in economic productivity.
Perhaps the legislature should extend those exemptions to all, thereby leveling the playing field for individuals and small businesses.
Click here for the Health Care Update archive.
You can unsubscribe to this and all future e-mails from the John Locke Foundation by clicking the "Manage Subscriptions" button at the top of this newsletter.