Insurance providers will not have to offer any new health benefits beyond what the state of Colorado already mandates that they include in their small-benefits plans in order to sell policies in health benefits exchanges, the U.S. Department of Health and Human Services HHS announced Friday. …

For an insurer to participate in these potentially lucrative exchanges, however, they are required to offer an essential benefits package that covers 10 types of services, ranging from preventive care to hospitalization to mental health care.

Business leaders feared that if the essential benefits requirement — undefined until Friday — included coverage of too many new services, it would make the plans offered through exchanges too expensive for the small businesses and individuals who don’t buy insurance now because of its costs.

Read more here: Feds allow states flexibility on ‘essential’ health benefits.  Denver Post coverage here.

I’m not sure I understand this.   If a state does not already require any of the ten mandated benefits specified in ObamaCare (HR 3590, sec. 1302), then the obeying the mandate would add to existing ones.

The article continues:

Dede de Percin, executive director of the Colorado Consumer Health Initiative, expressed disappointment in the preliminary ruling …

Specifically, de Percin said this could lead to a “race to the bottom” among states in which they will require few upgrades in coverage as part of a federal law that was meant to ensure better health-care coverage for all Americans.

I think de Percin is referring to the ability for residents of one state to buy insurance that is legal in another state. That is, if any exchanges work this way. But she’s wrong. See this post for why: Buying insurance across state lines not a “race to the bottom”

Further, Scott Gottlieb argues that mandated benefits create a race to the bottom in his article: Health Insurance Exchanges: A Race To the Bottom:

[T]o afford the mandated benefits, health plans will have to shave other costs. They’ll do this the same way the Medicaid managed care plans deal with similar government rules – by offering very narrow networks of providers that patients can see. Or by cutting what health plans pay for services, even if it leaves beneficiaries with fewer providers willing to offer them access to medical care.

Remember that mandated benefits are backdoor socialized medicine.

Federal officials are wrestling with a conundrum that could have major implications for small businesses throughout Colorado: Whether to require insurance plans offered through health benefits exchanges to focus on covering extensive services or on being affordable.

Numerous patient groups told officials with the U.S. Department of Health and Human Services   (HHS) what should be considered essential benefits in the exchanges — which will begin operating in 2014 under federal health care reform — during a closed-door meeting on Nov. 18 in Denver.

Autism advocates, for example, want full coverage for treatment of their disorder. Ophthalmologists want children’s visits to …

The rest of the article is accessible to subscribers only.  But just from the above, we see how organized minorities lobby for benefits for themselves at the expense of everyone else. For more details, see the post by Paul Hsieh, MD. on the essential benefits package.

Instead of having federal officials decide what the plans should cover, how about letting (gasp!) insurers and customers decide? The above political process for controlling health plans is akin to having the FCC decide what features cell phone plans should cover: how many minutes, texting limits, web access, etc.

In that case, surely there would be groups pushing to ban, say, plans that lack unlimited text messaging. This would increase the price of all plans, even for those who never text.

Soon, the Department of Health and Human Services will require all new insurance plans to cover birth control, breast pumps for new mothers, counseling on domestic violence, and many other essentials. Women will not be charged co-pays, thanks to these rules that were required by the Affordable Care Act.

It’s easy to get discouraged by the grinding nature of debates in Washington. But Monday’s news reminds us that our hard-earned victories reverberate for years, and they improve tens of millions of lives. Despite the inevitable frustrations, we continue our fights because our causes are worth the effort. …

One victory at a time can change lives. One single part of Health Care Reform means huge protections for women’s health.

Here’s the details from what’s perhaps one of the scariest domain names ever: Healthcare.gov.

What if government taxed everyone to pay for breast pumps and birth control, regardless of if you use them?  This is a socialist financing scheme, which currently exists for government run schools.  The Health & Human Services’ mandate on all new health plans (“insurance”) to cover breast pumps and birth control is just one example of how the 2010 health control act turns insurance companies into a vehicle for socialized medicine.

Also note that breast pumps and birth control fall way outside the realm of what real insurance is supposed to be.  For homeowners insurance and car insurance, you never want to make a claim. That means something undesirable happened.  You’re insured against undesired events. Sure, becoming pregnant can be undesired, but (rape aside) can only happen if you choose to be sexually active.

In this sense, birth control is itself a type of insurance, but to mandate that all health plans cover it is like mandating that all health plans allow policy holders to buy condoms.  Why stop there?

How about requiring all health plans to cover protective expenditures like bike helmets and new brakes on your car?

Also note that Mr. Palacio considers birth control and breast pumps to be “essential.” This is odd given that most discussion of universal politically controlled coverage that Democrats want assumes that all medical care is a life-or-death emergency.

The bigger point is that insurers should be free to sell health plans that cover such items, but not be forced to.  What should be the penalty for selling such illegal plans that don’t have these mandates? Companies in MA were fined for doing so, even though certainly some customers wanted the plans free of costly mandates.

(Via Ari Armstrong)

According to the [Massachusetts] AG’s complaint, U.S. Life sold health insurance policies in Massachusetts that were not authorized for sale and did not cover health services required by Massachusetts law. The mandated services at issue included mental health, maternity healthcare, infertility care, pap test screening, mammography and preventive care for children up to age six. Through these actions, U.S. Life violated the state’s Consumer Protection Act.

Read more: Insurance company to pay Massachusetts $760K for selling illegal products.

So the state’s Consumer Protection Act (sic) protects consumers from buying products they might actually want?  Isn’t it possible that the people who bought these policies wouldn’t have wanted to pay the increased premiums associated with the mandated benefits listed above?

Jared Rhodes of the Lucidicus Project tweeted: “MA AG to insurance company: ‘STOP SELLING INSURANCE POLICIES THAT PEOPLE WANT!’”

(via FIRM)

You might believe the ObamaCare offers the only way to cover people with pre-existing conditions — if you read only Colorado Public Television’s misleading “fact check” on Colorado Representatives and the contested health care bill. Actually, ObamaCare [HR 3590]makes things worse, not better, for people with pre-existing conditions. Our representatives should support better alternatives.

Read the rest of this article: How to Insure Americans with Pre-Existing Conditions.

Thanks to Paul Hsieh and Ari Armstrong for their suggested revisions.

Mandatory insurance will not remedy rising medical costs. Medical care and insurance prices soar because insurers, Medicaid, Medicare have replaced patients as paying customers for routine and discretionary care. Thanks to mandated insurance benefits, a pro-insurance tax code, and Medicare and Medicaid, most health plans are prepaid health care rather than insurance. Patients don’t care about prices or lower-cost treatment options. Doctors have an incentive to exaggerate diagnoses that justify costly treatment.

Prices stabilize or decline when patients pay directly for treatment. Examples include cosmetic surgery, refractive eye surgery, and like it or not, abortion. Meanwhile, prices of high-deductible insurance have increased less than comprehensive prepaid plans.

But rather than empowering you as a customer, mandatory insurance further empowers insurers — not just by forcing you to buy their products, but by outlawing affordable plans. It limits co-payments and deductibles and forces you to buy insurance with costly mandated benefits. These controls further block patients from being the customers who doctors and insurers seek to please.

But what about uninsured free-riders? The Blue Book summarizes this flawed “cost-shifting” argument for mandatory insurance: It “prevents the insured population from having to cover” medical expenses of the uninsured. But mandatory insurance imposes a far greater cost-shift by forcing you to buy more coverage than you might otherwise want. This excess cost forces you to add a large charitable donation to your insurance premium.

Echoing a flawed Families USA study, Boulder Congressman Jared Polis’s website says families pay an “annual hidden tax of $1,100 … to cover the cost of the uninsured.”  The study’s flaws include “inflating estimates of uncompensated care” and “disregarding important sources of payment” such as community health centers, government programs, and car insurance, notes Independence Institute economist Linda Gorman.

The actual cost-shift is small: just $85 per insured Coloradan according to a 2007 Lewin Group study. A recent Kaiser Family Foundation report came to a similar conclusion – that the cost-shift is at most “1.7% of private insurance premiums.”

Mandatory insurance increases premiums much more than this by mandating excessive coverage. For example, legal insurance includes costly mandated benefits you may not want. A typical mandate adds 0.75 percent to premium costs, concludes a 2008 study led by MIT economist Amanda Kowalski. HR 3590 (“ObamaCare“) will require everyone’s plan to include at least ten, including preventive care, maternity care, and substance abuse services.

Consider Massachusetts, which has enforced mandatory coverage since 2006. It “has the most expensive family health insurance premiums in the country,” reports the Boston Globe. The least expensive plans in Worcester, MA cost about three times as much as those sold in comparable cities like Fort Collins. The Massachusetts Medical Society reports “long wait times for appointments” and “more practices closed to new patients.”

The Blue Book’s “Arguments Against” correctly note that by 2014 the federal government will enforce a Massachusetts-style mandate on nationwide, and that Amendment 63 could not block this federal law. But Amendment 63 will be critical if the U.S. Supreme Court finds mandatory insurance unconstitutional. The feds may respond by requiring states to enforce mandatory insurance before they can receive federal funds.

Amendment 63 would also protect our right to pay doctors directly for medical care. The Blue Book’s argument says this is “unnecessary” because “no law restricts this practice.”  This argument is silly, as is the related argument that Amendment 63 could impede “current and future health laws and regulations.” This is the whole point of Amendment 63: to prohibit further government abuses of our right to pay for medical care as we see fit

Such arguments evade the core issue: While medical care is not a right, we each have the right to seek it through voluntary exchange with others. This means the tax code should be “medical care neutral” instead of punishing self-insurance while rewarding or mandating excessive insurance. It also means politicians should stop forbidding us from buying more affordable insurance policies sold in other states. This would make insurance affordable for millions of uninsured Americans.  Rather than add to health-damaging political controls that violate our liberty, politicians should repeal them.

This article was originally published in the Boulder Daily Camera on October 3, 2010.

Even if larger risk pools result in cost savings (for whom?), this no justification for mandatory health plans. How about legislation mandating that everyone who buys an iPhone also buy the extended warranty? A warranty is a type of insurance, after all. Mandatory warranties would expands the risk pool, and hence lower the costs of the warranty. But this exploits the people who prefer not to buy the warranty and insure against iPhone-related risks in other ways.

You might counter this by saying that a health plan is different, and that the uninsured are free-riders who increase everyone else’s health plan premiums when they don’t pay. As I’ve written before, this cost-shift from the uninsured is tiny, especially when compared to how much Medicaid and Medicare increase premiums.

Even if you think forcing people into a risk pool is OK, would this really result in health care cost savings?  Massachusetts is the only state that mandates the purchase of a health plan, but where are the cost savings?  The most affordable plans available on the exchange cost almost three times more than those available in Fort Collins. The Boston Globe reports that the premiums in Massachusetts are the highest in the country and emergency room visits and costs have increased.

One reason is that when politicians mandate that you buy a health plan, they get to define the minimum benefits a legal plan can have. Massachusetts has done this, and national health control legislation (HR 3590) defined them section 1302(a).  These can make many employer-based plans illegal.

With mandatory health plans, politicians pile on costly mandated benefits that increase premiums. Such “benefits” further distort insurance into a prepaid health plan, where customers are insulated from the true costs of treatment. Hence, they are not concerned with how much treatment costs or about more affordable alternatives. Since the patients isn’t paying, physicians have incentive to exaggerate diagnoses such that third-party payers will finance expensive treatment.

Health care prices stay in check when patients are the paying customers.  Examples include abortion (whatever your position on this), Lasik, and cosmetic surgery. When patients pay out of pocket, health care innovation benefits them and results in cost savings.

But mandatory health plans requires comprehensive plans such that the patient is rarely the customer, insurers are. Mandatory insurance provisions such as the one in health control legislation (HR 3590) threatens high-deductible HSA-qualified policies, even though such policies can reign in health care costs. The American Academy of Actuaries reported that such “plans can produce significant (even substantial) savings without adversely affecting member health status.”

If you want to expand risk pools, then push politicians to allow Coloradans to buy insurance available in other states, and those in other states to buy policies sold here. One study predicts that this would make insurance affordable for millions. This method of expanding risk pools doesn’t exploit people entering it. Rather than being forced, they choose to buy the product.

Update: Linda Gorman‘s article on direct-purchase insurance^* mentions how well such insurance already pools risk:

[Health economists Mark] Pauly and [Bradley] Herring report that direct-purchase insureds who had medical expenses about 4 times that of other people enjoyed premiums that were only 1.6 times as high. People who buy a policy and become ill have a strong incentive to continue paying. This may explain why age and sex were generally better predictors of direct-purchase premiums than chronic conditions.¹¹ Marquis et al. concur, reporting that the individual direct-purchase market is “an important source of long-term coverage for many who purchase it” and that “there is substantial pooling” that “increases over time because people who become sick can continue coverage without new underwriting.”¹²

^* That is, you buy the insurance policy (or health plan) directly from the insurer, not through your employer.