Op-Ed ; Overdose of Coverage

Feb 9, 2007

By SALLY C. PIPES

Ever wonder why health insurance costs so much in Massachusetts?

Well, maybe it has something to do with the fact that every insurance policy in the state must cover all kinds of services deemed unnecessary by many, including in vitro fertilization.

In fact, Massachusetts has 40 of these mandates. Should a resident want a policy that doesn't cover, say, chiropractor visits, sorry - the state has decided that all must have that coverage.

Enthusiasm for universal coverage has swept the nation, with Massachusetts and California leading the way. Maine and Vermont are revising their own systems of expanded coverage, and at least eight other states are pursuing similar reforms.

Certainly, the approximately 47 million uninsured in America is a problem, but the proposals under consideration do little to address the primary reason for the lack of coverage - very expensive insurance. And why are those costs spiraling upward? One reason is government meddling in the market for health insurance, particularly through the imposition of mandates and regulations.

The average state has 36 mandates on an individual policy. And with each mandate, the cost to the consumer goes up. These mandates often stand in the way of making insurance more affordable in the first place.

Just as options on a new car add to the total cost, so too do insurance mandates. If affordability and accessibility are the problems behind the number of uninsured, then why haven't states removed the mandates for those who want to buy a basic policy? It's not just the government's desire to micromanage - it's interest group politics.

Acupuncturists, for example, certainly provide an important service to many individuals. But is it really necessary for everyone to have acupuncture coverage? It would make far more sense to give individuals the freedom to purchase policies that suit their specific needs.

A bill like the Shadegg bill of 2006, if it had passed, would have allowed individuals to buy insurance across state lines. Fans of acupuncture could choose a slightly more expensive policy that covers the prickly treatment, while others who prefer to relieve their pain in other ways could purchase less comprehensive policies, most likely at a lower cost.

The current system guarantees that everyone pays the highest possible price. We are covered for things we don't use. Or if we do take advantage of these mandated benefits, we don't realize the full cost of the benefit because someone else pays. But we all indirectly absorb those costs thanks to higher premiums.

So it should come as no surprise that the universal program placing mandates on employees and individuals - passed in Massachusetts last year - is already destined to fail because it's now prohibitively expensive. Initial estimates for the monthly costs for an individual came in at $380, almost double what the designers predicted. (Companies have been sent back to the drawing boards to come up with policies that may cover less.)

Meanwhile, in California, Gov. Arnold Schwarzenegger has proposed new taxes on doctors, hospitals and employers, while doing nothing to address the high cost of health insurance. Health coverage is often too expensive for small businesses to offer, so a better solution would be to make it more affordable by reducing regulations, not to issue new penalties, and by allowing small employers to build a large risk pool.

Removing mandates from insurance policies may not grab headlines, but such a strategy would be far more effective in expanding coverage and lowering cost.

The conversation about health care reform is long overdue, but it's headed in the wrong direction. Without addressing the high costs of health care, efforts to achieve universal coverage by legislative fiat will fail. Just look at auto insurance. Even though it is mandatory in all but three states, one in seven drivers on our roads remains uninsured. There's a better way to expand health care coverage - through greater purchasing freedom and fewer regulations.

Let's hope Massachusetts learns from its mistakes and opts for a better approach.

Sally C. Pipes is president and CEO of the Pacific Research Institute and author of "Miracle Cure: How to Solve America's Health Care Crisis and Why Canada Isn't the Answer."

(c) 2007 Boston Herald. Provided by ProQuest Information and Learning. All rights Reserved.

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