Americans view health insurance much differently than other types of insurance. When a person says that they have great health insurance, what they really mean is that their insurance covers a whole host of medical problems – eye wear, dental, preventive care, and routine check-ups. Other forms of insurance, for example homeowners, cover major problems, but routine issues, like mowing the lawn and cleaning the gutters are covered by out-of-pocket expenditures.
Compounding this difference between health insurance and other types of insurance are state and federal mandates that require policies to cover various medical problems. The Affordable Care Act, or Obamacare, requires every health insurance policy to contain ten specific mandates. Each state has its own mandates that in many cases overlap the federal mandates. As of several years ago, Wyoming had 32 health benefit and provider mandates, Montana had 31, and Idaho had 10.
Instead of government-mandated “insurance” and entitlement programs that attempt to cover every possible health-related activity, health coverage needs to work like other forms of indemnity insurance used to mitigate risk, such as car, homeowners, and life insurance. Just as it makes little sense to use insurance to pay for gas or to mow the lawn, state and federal governments need to get away from the idea that health insurance should cover all our health-related events. True indemnity insurance should be there for catastrophes and emergencies. Routine day-to-day health services should be paid for out-of-pocket as needed.
Each health care mandate adds to the overall cost of health insurance. The reality is that not everyone needs all of the required mandates. For example, a healthy, unmarried thirty-year-old man does not need obstetrical coverage, yet he is paying for it in his health insurance plan. Women do not need tests to screen for prostate cancer.
Mandates are a classic example of politically powerful interest groups lobbying elected officials to include payment for their services in every insurance policy. Mandates restrict competition, drive up prices, and greatly restrict choices for patients.
Supporters of mandates say no one can predict a patient’s future needs, so the government should require people by law to buy expensive coverage. It is true that the future is unknown, but a catastrophic, high-deductible insurance plan can be designed to cover any future major medical problem. Affordable auto and homeowner insurance policies, except in very unusual circumstances, cover any and all major problems and provide individuals and families with millions of dollars of coverage should the need arise.
In addition, health savings accounts (HSA) allow people to save money for day-to-day health care expenses. These accounts require a person or family to purchase a high-deductible catastrophic policy to cover high-dollar medical expenses, but allow a tax-advantaged savings account to save for routine medical-related purchases. Savings can be accumulated from year to year and the balance in an individual’s personal account can be taken from one job to another.
As mentioned above, states vary in the number of mandates required. Unlike other forms of insurance, health insurance is sold on a state-by-state basis. A reasonable first step would be to allow the interstate purchase of health insurance. Patients would have a huge increase in their choices and the market would become much more competitive. The health coverage that some state governments mandate would still be available, but consumers would make their own decision about whether to buy it.
Americans across the political spectrum agree that the fundamental problem with health care in the United States is the ever-increasing cost. Reducing or eliminating government health insurance mandates altogether would be a definite move to lowering these costs.