One major factor clearly contributing to higher health care costs is state-level mandates. These mandates, a requirement by the government, as well as laws and regulations that follow them, prevent people from purchasing health insurance across state lines – a restriction that greatly reduces choice and insurance alternatives.
When consumers have fewer alternatives, prices go up. One major issue in the national health care debate is the need for greater competition in the health insurance market. The Public Option, supported by liberals, is not the only option, although that is exactly what many on the left want the general public to think. They cite skyrocketing health insurance premiums as the reason to have government-run health care.
In a deregulated market, rising premiums would inevitably bring new insurers to the table offering competitive prices. The opposite has happened in North Carolina where Blue Cross and Blue Shield currently holds a 72.5 percent market share, compared to its 38.8 percent market share in 1999. With that much ownership in the insurance market, it leaves little room for competitive pricing.
North Carolina has a total of 47 health insurance mandates to date, 25 of which are mandated benefits. This is the most obvious case of government standing in the way of competition, allowing one or a couple of very large insurance companies to gain a monopoly in the state by creating barriers to entry for new insurers.
Nine of the 25 mandated health insurance benefits in North Carolina have been adopted in the last decade. This includes some of the most costly such as the mental health parity coverage mandate which has been estimated to increase premiums by up to 10 percent.
Dozens of changes to these mandates, which have often served to increase the number and scope of regulations, have been extended to a larger portion of the insured population also within 10 years. These facts become even more striking when they are compared to reports, such as one by Families USA, which notes that insurance premiums in the state have doubled in the last decade.
The effect of mandates doesn’t end with just higher costs. By raising premiums, mandates also price people out of the health insurance market and increase the number of uninsured people in the state – this in turn raises the cost of health care even more.
Several studies demonstrate a positive correlation between the number of mandates in a state and the portion of the uninsured population. In 2006, the 16 states with the fewest mandates averaged an uninsured population of 13.1 percent, while states with the highest number reported numbers closer to 20 percent.
Sen. Philip Berger (R-Rockingham) proposed this legislative session Senate Bill 725, which would have allowed people to purchase insurance across state lines. The proposal was rejected in committee.
It makes little sense for politicians to be advocating for more competition on the one hand and inundating the insurance market with mandates that restrict competition on the other. The public option plan is being offered to us as the only alternative to increase competition, lower the cost of premiums, and reduce the nation’s uninsured population – however, such a claim is simply not true.
The lack of real analysis to support this line of thinking is disgusting… Sadly they say if you repeat something enough times it becomes true.
Where is the real analysis to support the belief that these mandates impact cost, other than the general opposition to regulation of any sort? Let’s be honest. Mandating some baseline is reasonable, so that you have insurance when you need it. It is also true that with politics and bureaucracy, there are probably some insurance mandates that should be left optional. It is also true that there are many short-sighted or selfish people (I don’t need it so why should I care). So mandates are both a good idea and a problem. The question is whether they really increase cost. I see no analysis or studies to show the feasible cost basis for any meaningful reductions.. Also if many knew what the mandates were and their relative cost impacts, I suspect that your support for this idea would diminish.
Same goes for purchasing across state lines. The fact is that the cost basis in a state for the delivery of medical care is a far greater issue than mandates. If you disagree.. show me the numbers or “shut up”.. Don’t mean to be impolite but the lack of analysis is disgraceful. Again I would love to have nationally portable policies, but I don’t know that it would reduce costs.
Would Civitas be willing to raise funds for a serious study rather than silly opinion polls?
By the way, the reason I call them silly polls is that who cares about the opinions of uninformed people? Many believe these proposals work because they hear them a lot. Many do not ask very penetrating questions but assume the work has been done.. despite the fact that they may be quite educated. So the point is that the analysis is incomplete.
Let me conclude that if an inadequate health care bill is passed, conservatives would have a large share of the blame… more than the “liberals”. It is the lack of willingness to put forth a serious plan that has left the gap.
The current bills are strong on access and weak on cost reduction. Conservatives could have helped.. but that would require some level of compromise and political risk. It is not just Pelosi that has kept them out of meaningful involvement.
Ouch! Looks like mandates do cost…
http://www.cahi.org/cahi_contents/resources/pdf/HealthInsuranceMandates2009.pdf
While I know that insurance premiums are too high compared to percentage of income 29 years ago, I do agree with such mandates as mental health parity.
The societal costs of untreated or umonitored mental health patients is very high, comparable, I am sure, with that of substance abuse/alcoholism. Mental health has been the red headed stepchild of health care too long and deserves parity so that hospitals can afford to treat these diseases with the same priority that they treat cancer or heart disease.
The drastic rise in health insurance premiums may be due more to the structure of health care delivery/insurance than to mandates. Hospital, doctor and medical supply costs drive these charges. What is keeping them in check when hospitals/doctors and insurance companies determine charges and reimbursement hand-in-hand? Providers make more with the more they charge. Insurance companies make more on percentage. Why not raise costs?
I can tell family hospital stories, but, suffice it to say, if our hospital existed today, I would not have to worry.
In 2007, I started to research starting a mental health inpatient hospital in North Carolina. The state hospital websites published their cost/day/patient in 2007. Luckily, I recorded these costs. In 2008-9, this data disappeared from the websites.
I plugged the daily charge for the state hospitals into my spreadsheet and the profit forecast worked well , even for a small number of beds. This charge is less than the Medicare/Medicaid allowance per patient/day. Because my model was based on an old, abandonned hospital, it afforded some room in costs. I compared it to the new Central Regional facility in Butner and my margin disappeared.
Cost/bed in Central is more than $ 1,000,000. Figure the rent on that for your next hospital stay and ask how did hospitals become so expensive. Our family mental hospitals were placed in old facilities, upgraded per insurance requirements and we had the cheapest cost per patient in a two county region in Ohio. This factor was an embarrassment to the members of the emerging health care planning groups ca. 1970. They wanted to “do something about this hospital.”
Physical plant costs for opening the old hospital facility today in an old hospital – $40-50,000/bed. Wonder why new is better? Why health care costs are so high? So do I.