More on an Autism Insurance Coverage Mandate

The lobbyists and activists working to impose a state insurance mandate for autism coverage in Michigan are extremely active. Less than two hours after I blogged on this topic yesterday, I was contacted by two of them.

One of the observations I made in that post was that proponents for a particular mandate always claim that their mandate will actually save money in the long run, which raises the question: “So if it's cost effective why don’t insurance companies just add the desired coverage in all policies without a mandate?”

Apparently the autism mandate proponents aren’t even pretending that it will save on overall medical costs. In an email one said to me, “The money saved is not from the insurance company’s bottom line. It is taxpayer money saved because . . . resources will not have to be used to fund less efficient treatment options such as public schools and Medicaid."

In other words, the putative savings are speculative “second order” effects for society as a whole. The mandate's costs are not speculative, however, but quite concrete, and are imposed on a very identifiable group: all health insurance consumers. Such non-transparent, unaccountable cost-shifting is one of the misguided policies that have made our current health care system a morass of skewed incentives and unintended negative consequences.

If as a society we decide that families with an autistic child should be helped by redistributing to them a little wealth from everyone else, then the honest, transparent and democratically accountable way to do it is by giving these families a direct subsidy from the government.

Although it’s not the kind of position one expects from a free-market think tank analyst, I have no problem with this. I have a huge problem, however, with sneaking the subsidy through the back door of a state insurance coverage mandate.

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The Council on Affordable Health Insurance is an industry-sponsored group that for years has been the source for comprehensive information on the number and cost of state insurance mandates. Their latest annual report and spreadsheet showing all the mandates in all the states, plus the approximate amount each adds to the cost of policy, is here.

It’s worth noting that estimates of how much autism mandates add to insurance costs has risen from "less than 1 percent" in past reports, to 1 to 3 percent today. CAHI points out that, “The cost estimates come from a working group of actuaries and not CAHI staff.”

Accompanying the latest tabulation is a brief paper, “Trends in Mandated Benefits, 2010.”  Here are some relevant excerpts:

Emerging Mandates: Several mandates are growing in popularity, and we expect to see much more legislative activity on them in the near future. For example: 

• Autism: Autism and treatment for its various complications is becoming one of the most discussed mandates. Autism is a brain disorder that affects three areas of development: communication, social interaction, and creative or imaginative play. In the past, autism has fallen under the broader category of mental health, but one of the latest state legislative trends is to pass a standalone autism mandate separate from mental health benefit mandates. Thus far, 25 states have passed autism mandates, but the number of bills introduced has grown each year. With advances in the diagnosis (including a new rapid test to screen for autism) and treatment, autism mandates will likely remain high on legislative priority lists.

Trends in Mandated Benefit Studies: Legislators often receive conflicting information on the cost of mandates. While individually most mandates cost very little as a percentage of premium (with many mandates costing less than one percent of premium), when all mandated benefits are combined together on a health insurance policy, the costs can be very high. Therefore, it is vital legislators understand these costs before voting on any new mandate. There are now at least 30 states that require a mandate’s cost to be assessed before it is implemented.

Trends in State “Mandate-Light” Policies: A few states are getting the message: mandates make health insurance more expensive. There are at least 10 states that allow individuals to purchase a policy with fewer mandates. Plans can be tailored to the individual’s needs and financial situation.

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