Mandating Higher Insurance Costs

By Marc Kilmer

At a time when the U.S. Senate is debating legislation that will supposedly bring down health insurance costs for Americans, the state House of Representatives just passed legislation that would hike these costs. While this legislation was passed with the best of intentions, it’s effect will be to hurt small businesses and lead to more uninsured in the state.

The legislation at question is two bills that mandate insurance companies cover treatment for autism (up to $36,000 a year) and treatment for diabetes. Some Ohioans will certainly benefit from these mandates and will find their costs for these treatments decline. The benefits from the legislation aren’t the whole story, though. The wider harm caused to everyone else that has health insurance was disregarded by legislators who promoted these measures.

Treatments for autistic children can be very expensive. Parents of these children understandably want someone else to help share their burden. Likewise, coverage for diabetics can cost a lot of money. But this legislation doesn’t really force insurance companies to pay for these treatments. Instead, legislators have forced everyone who has insurance to pay for them. Insurance companies don’t just print money to pay for services. They get money from the insurance premiums you pay. If they need more money, they raise the price of premiums.

While not the intended effect, if these bills become law it will lead to higher prices for health insurance in Ohio. Not all health insurance will be affected, though. Big companies that provide their own insurance aren’t covered by state law. Small businesses and individuals who purchase their own insurance are the ones who will be paying for this legislation.

Ohio has seen many small businesses close their doors or lay off workers in the past couple years. Business owners are cutting cut costs to stay in business. Even a modest price increase for health insurance will likely mean that some will drop such coverage completely. The result will be more people without insurance in the state. For those companies that do decide to keep insurance, it will mean either less profit for employers or lower wages for employees, both of which are especially unwelcome during a recession.

Ohio already mandates that insurance companies must cover a number of procedures, artificially raising the cost of insurance. For instance, even if you believe that chiropractors offer few legitimate medical treatments, your insurance must cover their services. Or even if you’ve never touched a drug in your life, state legislators mandate that your insurance cover drug addiction treatment. But compared to other states, Ohio does pretty well. Legislators have been steadily adding to these mandates over the years, though, and the governor wants even more regulation of health insurance. At the same time, these same politicians decry the rising cost of health insurance, even though they are directly responsible for part of this price increase.

All this is not to say that insurance should not cover treatment for autism or diabetes. Health insurance consumers should have the freedom to buy such insurance if they wish. But if you want to pay lower prices for a policy without such coverage, you should be free to do so, too. Not every one wants, or can afford, a policy that covers every disease or treatment. Ohioans should have the freedom to shop for insurance policies that meet their budgets and their medical needs. The Ohio House of Representatives wants to take that freedom from you, though. If this were the automobile market, it would be like legislators saying that if you don’t buy a Cadillac, you can’t own a car at all. For some people, a Kia works just fine.

The best way to help health insurance consumers is to remove government mandates and allow health insurance companies to tailor policies to meet individual consumers’ needs. Imposing politically-driven restrictions on insurance drives up the cost for all and helps only a very few. That’s not the kind of health insurance reform Ohioans need.

Marc Kilmer is a policy analyst with the Buckeye Institute for Public Policy Solutions, a research and educational institute located in Columbus, Ohio.

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