Just Keep Saying 'No' to Costly State Insurance Mandates

Lieutenant Governor-elect Brian Calley is urging the lame-duck Legislature to pass a new mandate that would force health insurance companies to include coverage for autism treatments in all policies, potentially requiring them to pay for extraordinarily expensive new treatment regimes whose efficacy is still speculative.

Having a child with autism imposes huge challenges on every family who suffers it, and as a society we should certainly be willing to extend a helping hand, preferably in ways that do not hide the cost or create skewed incentives and unintended consequences. Yet the latter is just what industry experts say health insurance mandates do.

One of those consequences is to further increase insurance premiums, causing many other Michigan families to lose their coverage altogether. The Council for Affordable Health Insurance estimates that state insurance mandates increase the cost of health care coverage anywhere from 20 to 50 percent.

Michigan currently falls at the lower end of that range, imposing relatively few coverage mandates (a chart showing all state mandates is here). Moving up that cost-curve is something policymakers here should avoid.

Supporters of a particular mandate usually produce some figures showing that their mandate will actually save more than it costs, but they tend to change the subject when a follow-up question is asked: "If it saves money, why wouldn't insurers just adopt it without having a mandate imposed?"

Charlie Owens, director of the National Federation of Independent Business-Michigan, has shared with the Mackinac Center a letter he sent this morning to members of the Michigan state Senate GOP caucus, urging them not to impose this new mandate. The House has already voted to do so (see who voted yes and who voted no here). Owens's letter is re-printed below.

Letter from Michigan NFIB Director to Michigan Senate GOP Caucus

Honorable Members of the Michigan Senate Republican Caucus:

We are asking that you do not take action on House Bills 4183 and 4476 that would mandate the coverage of Autism related disorders.

We do not question the good intent of those seeking to mandate autism coverage, nor do we doubt the weight of these problems. However, the unfortunate consequence of the cumulative effect of mandated coverage is that health care costs increase substantially for all concerned. Increases due to mandated coverage are particularly problematic for small businesses because they do not have the advantage of ERISA pre-emption that apply to large employers and group self-insured plans.

In addition, most government plans including Medicare and Medicaid, are exempt from such state mandates. The net result is that while some receive incremental increases in their health care benefits others run the risk of losing their health care entirely because employers will drop coverage due to the increased costs.

Add to this the uncertainty surrounding the recent federal passage of health insurance legislation and it becomes even more apparent that passage of this mandate in the lame duck session is ill advised. A more prudent approach would be to allow the next legislature and governor to examine this issue, and all mandate issues, in the context of state requirements under the federal health care legislation that is pending.

Again, we ask that you do not bring up this legislation for a vote in the lame duck session.

As always, we thank you for your support of small business.

Charles S. Owens
Michigan State Director
NFIB

Permission to reprint this blog post in whole or in part is hereby granted, provided that the author (or authors) and the Mackinac Center for Public Policy are properly cited.