NCPA - National Center for Policy Analysis


August 13, 2009

A video explaining Oregon's heavily politicized Medicaid system is currently making the rounds and serving as a warning against further government involvement.  Produced by Colorado's Independence Institute, the video shows how ailments with political constituencies are covered under the government medical system, while unchampioned conditions get short shrift.  The video makes good points, but it misses the fact that politicized government decisions already play a role in driving up the cost of private medical coverage, says J.D. Tuccille, a contributor to the Washington Examiner.

Back in 1997, the National Center for Policy Analysis (NCPA) brought in the actuarial firm Milliman & Robertson to estimate the costs created by increasingly common laws mandating coverage by private health insurance companies of growing lists of providers, conditions and benefits:

  • Under pressure from constituencies, lawmakers were ordering private insurers to include all sorts of things in their coverage that only a few customers might care about -- but for which everybody had to pay.
  • At that time, John C. Goodman, President, CEO and the Kellye Wright Fellow with the NCPA wrote, " Although there were only seven state-mandated benefits in 1965, there are nearly 1,000 today. While many mandates cover basic providers and services, others require coverage for such nonmedical expenses as hairpieces..."
  • In its study, Milliman & Robertson found that the 12 most common mandates could increase the cost of a family health insurance policy by as much as 15 percent to 30 percent.

That was in 1997.  Mandates have only increased in scope and cost since, says Tuccille:

  • In 2005, the Council for Affordable Health Insurance (CAHI) found that each mandate usually raised the cost of health care by anywhere from under one percent to three percent, with a few mandates hiking bills by as much as ten percent.
  • They currently increase the cost of basic health coverage from a little less than 20 percent to more than 50 percent.
  • And when you impose those mandates, you raise the cost of health coverage beyond the reach of growing ranks of people.

Source: J.D. Tuccille, "So, you want to replace profit-driven health care with politics-driven medicine?", August 11, 2009.

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