Mandated Health Care

Wisconsin has added certain required coverage for health insurance policies over the course of many years. There are more than twenty such requirements or “mandates” as they’re known in Wisconsin. There are even more such mandates across all fifty states.

Mandates have the effect of adding to the overall cost of health care. In some cases this happens because such services were not covered earlier or only partially covered. Mandates can and do make access to such care easier without significant personal cost. Health care costs drive health insurance costs, not the other way around as much of our media would have us believe. Mandates increase our health care costs. And that adds to our crisis in health care.

Mandates viewed individually appear to be good things. The following list shows those that are required in Wisconsin (Fact Sheet on Mandated Benefits in Health Insurance Policies, Office of the Commissioner of Insurance, PI-019 [R 01/2007]):

Optometric Service Access, Chiropractic Service Access,
Nurse Practitioner Access, Dental Service Access,
Adopted Child Coverage, Handicapped Child Coverage,
Home Health Care Access, Skilled Nursing Care,
Kidney Disease Coverage, Mammography Examinations,
Newborn Infant Coverage, Grandchild Coverage,
Diabetes Equipment & Supplies, Genetic Testing Restrictions,
HIV Treatment Drug Access Lead Screening (for children under 6),
TMJ Disorders, Breast Reconstruction,
Child Immunizations, Certain Clinical Cancer Trial Costs,
Maternity Coverage (if provided for any insured, it must be available to all),
Nervous and Mental Disorders, Alcoholism, and other Drug Abuse,
Hospital/Ambulatory Surgery Charges & Anesthetics for Certain Dental Care

(Self-funded [ERISA] plans by a city, village, county, or school district plans may be included in these regulations.)

Reviewing these individual mandates, we begin to get a better idea of how they might increase costs. Chiropractic-type services, for example, were covered originally only if delivered by a medical doctor. If we wanted to see a chiropractor, we did and we paid for it from our pockets. Chiropractors lobbied to gain the right to engage in the delivery of these services through health insurance policies and ultimately won that right. Unit costs were reduced somewhat with the new competition, but increased access to these services, coupled with advertising by the newly approved providers, likely more than offset whatever unit cost savings resulted.

The federal law that enabled health maintenance organizations also added the requirements for some of the now-mandated items in the interests of promoting preventative care (such as vision examinations). Labor-management bargaining contributed to the addition of benefits over the years and that led to certain of the mandates. Insurers were complicit since they added more such benefits in the attempt to differentiate themselves. Health care provider-to-consumer advertising also had a significant impact on health care mandates and increased costs.

Some states have begun to permit health policies referred to as “mandate-light” policies to be sold within their borders. These policies contain fewer mandates, or completely eliminate mandates, thus reducing the cost of those policies, and thereby making health insurance more affordable. The total cost for mandates in Wisconsin is estimated at from 20% of premiums to as much as 32% of premiums.

A valid question is: Should Wisconsin permit mandate-light policies to be sold? If that answer is yes, then the question becomes, which mandates should be excluded? The job of deciding which are in and which are out would be difficult. [Almost as difficult as a government run program deciding what to cover and what not to cover.] Self-insured plans in the private sector could provide some benchmarks for what is provided to employees by a majority of the self insured companies.

If mandate-light plans were permitted, would insurers still be willing and able to offer full mandate policies? Would they be able to price those to anticipate the increased costs of claims being spread across a smaller segment of society [adverse selection]? Would the state promulgate new laws requiring both types of policies? If both types were required, the premium cost would almost certainly be higher in the full mandate policies since only those using the services would be likely to enroll in these plans.

Would this adversely affect many patients or few patients? Is the primary impact more likely to be limited to the provider groups due to decreased volume? Would decreased volume lead to higher unit costs by those same providers? Would the elimination of mandates spawn new policies from some of the more specialized insurers (a talking duck comes to mind)?

As with all questions relating to health care, these are difficult to answer. The free market has historically responded to these needs. Critical illness policies, which have been available for years, were introduced before such coverage was popular in the mainstream, and continue to be purchased by those who believe them to be of benefit.

It has been established that fewer small employers believe they can afford to provide health insurance benefits for their employees each year. The latest reports indicate that something in the range of 60% to 62% of small employers now provide access to health insurance benefits.

Would mandate-light health insurance be better than nothing? Would mandate-light be better than a single payer system operated by a government agency or quasi-public entity? Would mandate-light actually be a step toward relying upon insurance for what it was originally intended…catastrophic unforeseeable health care needs?

We have come to expect fully prepaid health care with but small office visit co-pays, at best. Our “entitlement mentality” has caught up with us and we’re all guilty of permitting that to occur. It has also caught up with our employers and with our country. We are only a few years away from the day when health care costs will consume 20% of our gross domestic product.

We need candid, honest debate and we need it now. That will be difficult in the highly charged environment of today, but it is essential. Can we indeed find our way “back to the future” or are we destined to repeat the failures of so many of our world neighbors?