NCPA - National Center for Policy Analysis

HIAA Study: Ten Million Americans Uninsured Due To Mandates

January 26, 1999

Nearly one out of every four uninsured Americans has no health coverage because of the cost of state mandates, according to a new study published by the Health Insurance Association of America (HIAA).

Interestingly, the proportion of uninsured that is due to mandates is similar to the findings of a study published by the National Center for Policy Analysis in 1988, "Freedom of Choice in Health Insurance," NCPA Study No. 134, by John C. Goodman and Gerald L. Musgrave.

The new study by Gail A. Jensen, of Wayne State University, and Michael A. Morrisey, of the University of Alabama-Birmingham, found there are well over 1,000 coverage mandates throughout the U.S. Mandates require insurers to cover specific treatments or conditions in their policies.

  • Such state mandates raise premiums by up to 13 percent for businesses that offer health insurance to their employees, and most of the cost is borne disproportionately by workers in small businesses.
  • "Based upon these percentages, more than 10 million Americans have no health insurance because of the high cost of mandated benefit requirements," says HIAA President Chip Kahn.
  • Between 1970 and 1996, there was at least a 25-fold increase in the number of state mandates on health plans.

On average, if an employer does not offer certain services, Jensen and Morrisey found some mandates increase a health plan's premiums substantially: by 15 percent for routine dental services; 13 percent for psychiatric hospital stays; 12 percent for visits to psychologists; and 9 percent for for chemical dependency treatment.

  • Furthermore, in the absence of state mandates, 18 percent of small businesses without health coverage would buy it.
  • In Virginia, mandates accounted for 21 percent of health insurance claims.
  • In Maryland, they accounted for 11 to 22 percent of claims; in Massachusetts, 13 percent of claims; and 5 percent in Idaho and Iowa.

In general, health care providers are the primary proponents of state mandated benefits legislation, say the authors.

Source: Gail A. Jensen and Michael A. Morrisey, "Mandated Benefit Laws and Employer-Sponsored Health Insurance," January 25, 1999, Health Insurance Association of America, Suite 600 E, 555 13th Street, N.W., Washington, D.C. 20004, (202) 824-1600.


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