Health care mandates increase number of uninsured
New health care mandates will increase the number of uninsured, including those in Ohio, according to a recently released study.
The study, which was completed by the Center for Risk Management and Insurance Research at Georgia State University using U.S. Census data, examined the likelihood of a person being uninsured and how that was related to various state health regulations.
70,000 could lose insurance
One such regulation is mandated mental health benefits, which would force insurance companies to include coverage of mental health care including care for substance abuse. The study estimates that such mandates make people almost 6 percent less likely to have insurance.
The Ohio legislature is expected to consider a so-called mental health parity law in 1999. Based on the estimates by the Center for Risk Management and Insurance Research, this bill could cost over 70,000 Ohioans their health insurance.
The study confirms that many state health care reforms have a negative (and often unintended) impact. Although most health care reforms promise to improve access to health care and reduce costs, they often achieve the opposite effect, adding to the cost of insurance and thereby making people less willing or able to buy it.
State mandated reforms, such as individual rating bands, individual community rating, small group rating bands, and small group community rating combined with guaranteed-issue requirements, reduce a person’s likelihood of being insured between 5.1 and 28.5 percent, depending on the type of reform.
Risk pools boost coverage
However, allowing insurance companies to form high risk pools actually increases the probability of being insured by 1.5 percent, suggesting that high risk pools act as a market proxy for assessing risk.
Notes
[1] William S. Custer, Health Insurance Coverage and the Uninsured (Atlanta, Georgia: Center for Risk Management and Insurance Research, Georgia State University, December 10, 1998), available online from the Health Insurance Association of America, http://www.hiaa.org/newsroom/uninsured.html.
[2] H.B. 718, the Mental Health Parity Act, was introduced last year but was not voted on. The bill may be reintroduced in early 1999. See Mark Ferenchik, "Mental-health bill opposition likely," Columbus Dispatch, December 28, 1998, pp. B1-2.
[3] The Center for Risk Management and Insurance Research estimate that mental health mandates increase the probability of being uninsured by 5.8 percent. Currently the probability of being uninsured in Ohio is 13.3 percent; thus, the probability would rise by 5.8 percent to 13.9 percent. Using 9.77 million people under age 65 as a base, this translates into an additional 74,240 uninsured Ohioans as a result of the mental health mandate.
[4] The findings of this study are supported by other research. Jonathan Gruber, economics professor at the Massachusetts Institute of Technology, examined the effects of mandated maternity care and found that wages decreased 5.4 percent for 20- to 40-year-old women in states that passed mandatory coverage (American Economic Review 84:3 [1994], pp. 622-641).
[5] This problem was identified over ten years ago in the Economic Report of the President, which stated that "[a] recent study estimated that as many as one-fourth of the uninsured, or more than 9 million people, lack health insurance because of the high cost of policies due to State regulations" (House Document No. 102-2, February 1991, p. 141). The report cited is John Goodman and Gerald L. Musgrave, "Freedom of Choice in Health Care," NCPA Policy Report #134 (Dallas: National Center for Policy Analysis0., Nov. 1988).
[6]
Increase in Likelihood
Key State Reform of Being Uninsured
Small group community rating and guaranteed issue 28.5%
Small group rating band and guaranteed issue 15.8
Individual community rating and guaranteed issue 11.3
Mandated mental health 5.8
Individual rating band and guaranteed issue 5.1
High risk pool -1.5
Source: Center for Risk Management and Insurance
