Many elected officials in Topeka and Washington say that affordable health care is one of their top priorities. Each session, special interest groups who want coverage for specific services approach lawmakers. They ask that laws be written that require every insurance company to include a specific service in all their contracts. These are called mandated benefits.
When federal or state legislation requires that specific benefits or services be added to all health insurance plans, premiums will go up. It’s that simple.
Mandated benefits force costs up for two reasons. First, everyone’s premium increases to cover the cost of providing the new service. Second, history shows that the demand for a service increases dramatically once it becomes available to everyone. When patient demand for services increase, the cost of coverage goes up, too.
In trying to increase benefits for a certain group of people, well-intentioned lawmakers actually raise the cost of health insurance for everyone. When costs rise, many people can no longer afford health insurance at all. National research applied to Kansas suggests that for each 1 percent increase in the cost of health insurance, 3,000 Kansans drop their coverage because it becomes unaffordable.
Elected officials and government regulators can negatively impact health care costs in other ways. For example, health insurers had to spend millions of dollars to comply with such acts as the Health Insurance Portability and Accountability Act (HIPAA) or patient protection legislation. This is true for a company like ours that already has extensive safeguards in place to protect our members’ privacy and to ensure efficiency.
We spent more than $15 million to comply with certain sections of HIPAA that required major changes to our computer systems and operating procedures. The end result is that we are doing the same activities, but in a different way. Our members received little or no additional value from these changes, but shared in the expense.
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