When New York legislators arent carousing like a group of aged frat boys and girls, they often divert themselves by making mischief with the states health-care system. Though their hanky panky with interns occasionally makes headlines, their current attempts to monkey around with New Yorks already sick health-care system will have far more damaging consequences.
At a time when New York frets about having one of the largest groups of uninsured residents of any state, legislators are doing their utmost to increase the cost of already pricey health care even further by proposing an incredible 80 different new health insurance mandates. These mandates would force New Yorkers to buy gilt-edged policies that must pay for everything from substance abuse programs to abortions to massage therapy to deposits to a sperm bank, whether policy owners want the coverage (and want to pay for it) or not. The proposed requirements join what is already a long list of mandates in the state35 in allwhich by one estimate add $1,000 a year to the cost of a typical family health-insurance policy.
Mandates are a politicians dream but a consumers nightmare. Legislators love to pass laws requiring insurers to pay for all sorts of services and tests, because it makes them seem like heroes taking on the big, bad insurance companies. Because of mandates, insurers in New York are required to pay for chiropractic services, birth control pills, infertility treatments, and on and on.
But as anyone who takes Econ 101 understands, its not insurers but consumers who pay for these mandates, which drive up insurance costs by assuring overuse of the health-care system. And despite advocates claims that mandates save money, years of experience show that even sensible-seeming mandates often have no such effect. For instance, back in the 1980s, many states passed laws requiring patients to get a second opinion before undergoing surgery. The mandate was supposed to lower costs by avoiding some surgeries, but instead it raised costs by 7 percent, one study found, because doctors rarely contradicted their colleagues.
In New York State, the entire existing menu of 35 mandates adds 12.2 percent to the cost of a typical state policy, according to a 2003 study by NovaRest Consulting. Partially as a result of this mandate madness, family health insurance in New York now averages more than $10,000 annually, higher than in all but two other states.
Mandates also limit the flexibility of consumers to purchase low-price policies that fit their needs. Today, many businesses and consumers would like to buy streamlined insurance policies that protect against the big bills that come with catastrophic illnesses but leave it to the insured to pay for everyday health-care costs. But such policies are prohibited in New York State, where a one-size-fits-all mentality rules. Thats one reason why 3 million people in the state dont have health insurance. Those people have nothing to celebrate every time legislators add another mandate pushing insurance costs even further beyond their reach.
Because the cost of mandates is now so well documented, some states have moved to limit the ability of politicians to load up the system with new ones. States like Pennsylvania and New Jersey have established commissions to calculate the cost of proposed mandates and issue opinions as to whether the cost would outweigh the benefits. But legislation designed to establish similar mechanisms in New York State has gotten nowhere.
Without some such restraint, the debate on health-care mandates in New York will continue to be at the mercy of politics, grandstanding, and emotion. The losers will be the growing number of New Yorkers who cant afford insurance at all.