(May 14, 2009) Nine health care coverage benefit mandates pending before California legislators could cost employers, individuals and the state public employees pension system more than $394 million, a recent analysis shows.
Benefit mandates typically require health care plans to cover particular health care services.
The analysis by the independent California Health Benefits Review Program estimated that 7,600 people would lose coverage due to premium increases putting the cost of insurance out of their reach.
The analysis concludes that the cumulative impact of the nine mandates would boost employer premiums by more than $186.5 million, increase individuals’ premiums by $207 million and increase costs for the California Public Employees’ Retirement System by more than $1 million.
The California Chamber of Commerce has joined forces with the health care community and small businesses to highlight to the Legislature the cost of benefit mandates for consumers and businesses.
California law currently includes 48 health care benefit mandates, the CalChamber, National Federation of Independent Business, California Association of Health Plans and Association of California Life and Health Insurance Companies pointed out to members of the Assembly and Senate.
Fewer Choices
The cumulative impact of the benefit mandates will drive up the cost of insurance to consumers, including employer-sponsored programs, limit product choice and reduce coverage, the CalChamber and others pointed out.
Each benefit mandate accounts for between 0.33 percent and 5 percent or more of the overall cost of a health insurance policy, according to a report by the Pacific Research Institute.
Adding new mandates is especially burdensome when consumers are struggling with the economic slowdown and little has been done to contain actual medical costs.
Escalating Health Care Costs
In highlighting the costs of this year’s proposed benefit mandates for the members of the Legislature, the CalChamber and other groups pointed out that:
Health care spending is projected to be 17.6 percent of the U.S. gross domestic product (GDP) in 2009.
The United States is projected to spend more than $2.5 trillion on health care in 2009, according to the Centers for Medicare and Medicaid Services.
The 2009 spending on health care amounts to $8,160 per capita, compared to $356 per capita (and 7.2 percent of GDP) in 1970, when total spending was $75 billion.
Health Benefits Review Program
The California Health Benefits Review Program, funded by an annual assessment on California health plans and insurers, was established in 2002 in response to legislation and reauthorized in 2006. The program responds to requests from the state Legislature to provide independent analysis of the medical, financial and public health impacts of proposed health insurance benefit mandates and repeals.
A small analytic staff in the University of California Office of the President works with a task force of faculty from UC and private university campuses as well as actuarial consultants to complete each analysis during a 60-day period, usually before the Legislature begins formal consideration of a mandate bill.
A strict conflict of interest policy ensures that the analyses are undertaken without financial or other interests that could bias the results. A National Advisory Council, made up of experts from outside the state of California reviews draft studies to assure their quality before they are transmitted to the Legislature.
Each report summarizes sound scientific evidence relevant to the proposed mandate but does not make recommendations, deferring policy decision-making to the Legislature.
Staff Contact: Marti Fisher