One major factor clearly contributing to higher health care costs is state-level mandates. These mandates, a requirement by the government, as well as laws and regulations that follow them, prevent people from purchasing health insurance across state lines – a restriction that greatly reduces choice and insurance alternatives.
When consumers have fewer alternatives, prices go up. One major issue in the national health care debate is the need for greater competition in the health insurance market. The Public Option, supported by liberals, is not the only option, although that is exactly what many on the left want the general public to think. They cite skyrocketing health insurance premiums as the reason to have government-run health care.
In a deregulated market, rising premiums would inevitably bring new insurers to the table offering competitive prices. The opposite has happened in North Carolina where Blue Cross and Blue Shield currently holds a 72.5 percent market share, compared to its 38.8 percent market share in 1999. With that much ownership in the insurance market, it leaves little room for competitive pricing.
North Carolina has a total of 47 health insurance mandates to date, 25 of which are mandated benefits. This is the most obvious case of government standing in the way of competition, allowing one or a couple of very large insurance companies to gain a monopoly in the state by creating barriers to entry for new insurers.
Nine of the 25 mandated health insurance benefits in North Carolina have been adopted in the last decade. This includes some of the most costly such as the mental health parity coverage mandate which has been estimated to increase premiums by up to 10 percent.
Dozens of changes to these mandates, which have often served to increase the number and scope of regulations, have been extended to a larger portion of the insured population also within 10 years. These facts become even more striking when they are compared to reports, such as one by Families USA, which notes that insurance premiums in the state have doubled in the last decade.
The effect of mandates doesn’t end with just higher costs. By raising premiums, mandates also price people out of the health insurance market and increase the number of uninsured people in the state – this in turn raises the cost of health care even more.
Several studies demonstrate a positive correlation between the number of mandates in a state and the portion of the uninsured population. In 2006, the 16 states with the fewest mandates averaged an uninsured population of 13.1 percent, while states with the highest number reported numbers closer to 20 percent.
Sen. Philip Berger (R-Rockingham) proposed this legislative session Senate Bill 725, which would have allowed people to purchase insurance across state lines. The proposal was rejected in committee.
It makes little sense for politicians to be advocating for more competition on the one hand and inundating the insurance market with mandates that restrict competition on the other. The public option plan is being offered to us as the only alternative to increase competition, lower the cost of premiums, and reduce the nation’s uninsured population – however, such a claim is simply not true.