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Mandates On Health Insurers Pile Up


While the 104th Congress moved to end unfunded mandates forced on the states, critics note that the private sector -- notably the health care industry -- received no such protection. For example, rules were passed that forced all health insurers to cover a minimum 48-hour hospital stay for maternity, and to cover mental -- as well as physical -- ailments.

The new Congress has more of the same in mind. Some Republicans in Congress are pushing for fresh mandates on mastectomies.

Moreover, numerous states have mandated expensive new procedures insurance companies must provide for -- including acupuncture, in-vitro fertilization and hairpieces.

  • There are also mandates directing insurance companies to cover substance-abuse treatment, mammography screening, outpatient mental health counseling and chiropractic care.

  • These amount to well over 1,000 insurance rules dictated by states over the past 20 years.

  • Studies have found that these mandates add 10 percent to 20 percent to the cost of an insurance policy.

The cumulative effect has devastated the small-group insurance market. And while large employers have a loophole to avoid mandates -- self-funded insurance -- small companies are often left with one choice: dropping insurance coverage for their employees altogether. The number of people without insurance may have increased by up to 25 percent.

A wide variety of service providers within the "health-care" market will press for inclusion under health insurance systems.

Experts say the answer may well lie in medical savings accounts. Rather than require everyone to buy expensive coverage for every benefit that anyone wants, employers could purchase a catastrophic-care plan to cover serious and expensive medical problems, and help fund workers' MSAs with the premium savings. Employees could then spend MSA funds on any services they desire.


Source: Greg Scandlen (Health Benefits Group), "Congress' Drive for Higher Health Costs," Investor's Business Daily, February 18, 1997.


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