Gov. Rod Blagojevich announced recently that he wants to give autistic children the most comprehensive health insurance coverage in the nation. If the legislature agrees to changes he wrote into a bill, state law will require companies that sell health insurance in Illinois to pay up to $36,000 a year for an unlimited number of medical visits for patients up to age 21.
A bill awaiting the governor’s signature would require health insurers in Illinois to pay the cost of treating anorexia and bulimia, which can run as high as $2,500 a day.
Only the hard-hearted would oppose covering such conditions, right? But you don’t have to be hard-hearted to acknowledge that requiring insurance companies to cover more illnesses isn’t free. You pay when states mandate additional coverage. Each mandate—however worthy on its merits—adds to the overall cost of health insurance.
How much mandates add to premium costs is a matter of debate. It depends on how the mandate is written, whether it is open-ended or limited. It also depends on whether the mandate covers relatively inexpensive procedures such as mammograms and prostate cancer screenings, or broader, ongoing treatment for, say, mental health care.
Illinois requires all three of those. Mammograms and prostate screenings raise the overall cost of a health insurance policy by less than 1 percent each, according to the Council for Affordable Health Insurance, an Alexandria, Va.-based advocacy group of health insurers seeking market-oriented solutions. But mental health coverage raises the cost of a policy by 5 to 10 percent. All told, state requirements for coverage can add 20 to 45 percent to the cost of coverage, according to the council.
The average state has 32 health-benefit mandates, up from an average of five per state in 1979, according to John Graham, author of a Pacific Research Institute study on state health mandates that was released this month. Illinois has 43 requirements. (See the box below.) Illinois includes some of the most expensive requirements, such as coverage for infertility treatment.
Don’t assume, though, that you’re covered. State mandates don’t apply to employers who pay their own health costs and are governed by the federal Employee Retirement Income Security Act. Those self-insurance plans may cover conditions mandated by the state, but they don’t have to. For the most part, we’re talking about large companies. Smaller companies can’t afford to self-insure, yet that means they’re the ones most likely to face the cost of mandates.
Some states have gotten wise and reduced the number of mandates, or at least stopped adding to them, said Richard Cauchi, health program director of the National Conference of State Legislatures. Some states have begun to recognize that raising the cost of insurance keeps more people from getting it.
Cauchi said 30 states require a cost-benefit analysis before adding a mandate. Illinois doesn’t. That’s the least Illinois could do—be honest about the real cost of its decisions.