Can’t they read? Or are they deliberately lying?

Once again someone is publishing an article misstating the findings of DHCFP’s landmark study on mandated health insurance benefits. Here’s what Health Care News, published by the conservative Heartland Institute is claiming:

“Rising health insurance costs in Massachusetts, where possession of insurance is required by state law, are in large part attributable to onerous mandatory minimum coverages the state government requires in every policy sold in the state, a new state government study shows.

“An assessment conducted by the Massachusetts Division of Health Care Finance and Policy (MDHCFP) found 12 cents of every $1 spent on insurance premiums in the state goes toward paying for those mandated benefits–a cost to consumers of more than $1.3 billion per year.”

No. Not at all. Not even close. The DHCFP study carefully looked at all the required insurance coverage mandates in Massachusetts law. All told, a naive look at the mandates leads to the 12-cents-of-every-dollar conclusion. But that’s not the whole truth.

Some of them, like maternity care and some mental health benefits, are also required by federal law. So the state mandate doesn’t add a penny to costs here. Other mandated benefits would be offered by insurers even if there were no state requirements. The study looked at what self-funded companies offer, who are not subject to the mandates at all. These companies offer many of the same benefits, like diabetes care, despite no mandate being imposed. So these benefits are offered no matter what.

If you take out the federally-mandated benefits and look at the difference between what self-funded companies voluntarily offer and what insurance companies have to offer, the cost to our insurance system of state-mandated benefits is just 1.2% of insurance premiums.

The study proposes that some self-funded companies offer some benefits because they have to compete with employers offering full insurance. They generously estimated this effect to equal roughly half of the benefits provided, and so the study concludes, “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%.

Here’s the analogy. Say Massachusetts required cars to have tires, side mirrors and license plate holders. Well, federal law already requires side mirrors, and no car maker would think of selling cars without tires anyway. So all one could say about the Massachusetts law is that it’s the cost of the license plate holder that could be saved by repealing the law.

Call it the mandated benefits fallacy. We’re going to be on the lookout for anyone repeating the false information, and will be calling them out in public for spreading misleading information. Watch this space for updates.
Brian Rosman