ONE SURE way to hold down health insurance premiums in Massachusetts would be simply to cut out coverage for all injuries and illnesses. To keep insurers from giving into that temptation, the state Legislature requires them to cover certain services, from mental health care to diabetes treatment to mammograms. Still, whenever such proposals arise, the chorus from insurers is the same: coverage would be so much cheaper if not for all those pesky mandates.
A new study by the state's Division of Health Care Finance and Policy disproves that argument. State mandates, by and large, are not imposing unreasonable costs on health consumers - and certainly aren't what's causing the relentless increase in healthcare premiums year after year.
At first glance, the state study seems damning. During the last half of 2004 and the first half of 2005, the report concludes, 26 mandated benefits accounted for 12 percent of healthcare spending in Massachusetts. And reasonable people might disagree with at least a few of the mandates; in a world where so many children are waiting to be adopted, there will always be controversy over whether infertility treatments - the fifth-most expensive mandate - are medically necessary. Legislators' decisions on what to mandate are a function not just of medical priority but of political advocacy.
But most pricey mandates deal with services that are required by federal standards or, more important, that consumers should and would demand anyway. Maternity care, the most expensive mandate, cost insurers $402 million during the study period. And yet what insurer could compete for customers without it? And can an insurer serve its customers fairly if it refuses coverage - which is to say, discourages treatment - of mental illness?
When researchers set aside such costs, they found more controversial state mandates, such as chiropractic services, home healthcare, and infertility treatment, represented perhaps 3 to 4 percent of every health insurance premium. This isn't pocket change, but neither does it explain annual double-digit increases in premiums - especially since no new mandate has been imposed since a 2006 moratorium.
Why are costs rising? Consumers want the best treatment possible - and, in Massachusetts at least, prefer to receive their care at top-notch research institutions. Doctors and hospitals, meanwhile, are paid largely by the quantity rather than the quality of the care they deliver. Efforts to contain costs and extend coverage need to take these dynamics into account.
Mandates may be a red flag for the health insurance industry, but the new study explains why no one should expect to save much by cutting them out.
