A Healthy Blog

Massachusetts health care — wonky, with a healthy dose of reality

In What Respect, Charlie: Again Calling Out the Mandated Benefits Fallacy

In What Respect, Charlie: Again Calling Out the Mandated Benefits Fallacy

September 22, 2008

This time it's Harvard Pilgrim Health Care CEO Charlie Baker who misreads the DHCFP report on the cost of mandated insurance benefits.

In his own blog, and in reprinted comments on the widely-read national "The Health Care Blog," Charlie repeats the claim that our "mandated health insurance benefits cost insurance purchasers about $1.3 billion - or 12% of their premiums - each year."

We call it the "mandated benefits fallacy," and it's not the actual conclusion of the study. Full details are in our post, but the short story is that DHCFP properly takes out from the cost federal mandates and benefits that would be provided even without a mandate. Their conclusion: “mid-range estimates in the three to four percent of premium range (roughly $300 million to $400 million annually) may be a reasonable estimate of the mandate laws’ marginal impact on health care costs directly associated with the covered benefits described in the laws.”

Three to four percent. Not 12%.

Charlie introduces the study to complain about the MCC requirement for prescription drugs, which is technically not an insurance mandate. There's a lively discussion on both blogs - with HPHC commenters including Nancy Turnbull and Jon Hurst, and the THCB commenters including national heavy hitters Matthew Holt and Jeff Goldsmith. Our position on the issue is clear: Medications are an invaluable piece of modern medicine and critically important to the prevention and treatment of disease. Allowing plans without prescription drug coverage would be just as irrational as approving plans that did not cover hospital visits.
Brian Rosman and Lisa Kaplan Howe