It’s Simple: More Health Benefit Mandates = Higher Costs

As further implementation of federal healthcare legislation quickly approaches–along with its associated cost increases–state lawmakers are still pursuing measures that will also increase healthcare costs in Connecticut.

Specifically, these cost-drivers are health benefit mandates which are services or procedures that insurers are required to cover. Health benefit mandates are a two-pronged problem, causing:

1. Increased premiums, and   
2. Decreased access   

Mandates Decrease Access

Affordability is key to expanding access to health insurance in Connecticut, but health benefit mandates increase the cost of health insurance, making it even less affordable and accessible. 

The reality is that as the cost of health insurance increases, employers and employees are left with fewer and fewer options for health plans they can afford and therefore, less access to health insurance due to cost barriers.  

Each new mandate passed by the legislature directly results in an increased premium rate to pay for the new service or procedure required by the state. Therefore, new mandates decrease access by making insurance more expensive to buy.

Although mandates typically provide a benefit to a certain group of people, the problem is that the higher number of mandates restricts the ability of insurers to offer low-priced, more basic plans to everyone who needs them.

Instead–and with the potential passage of even more health benefit mandates this year–insurers are required to offer more costly plans to Connecticut consumers. 

Increase Cost to the State

Making the problem even worse this year is that under federal healthcare legislation the state must pick up the tab for the cost of any new health benefit mandates passed this year. 

This is because the federal legislation required the state to adopt an essential health benefit package (that is, the group of benefits the state determined must be offered in all health insurance plans) and Connecticut already adopted its Essential Health Benefit package and included all of the state’s existing mandates in that package. 

The issue is that now the legislature wants to add even more mandates to the benefits package that was already considered and adopted. If states go back and add even more health benefit mandates the feds have ruled the state must pay for any of those new mandates itself.

This means that the state will use state tax dollars to fund new mandates it passes this session. Therefore, any new mandates will not only increase costs for small business but taxpayers as well. 

For more information, contact CBIA’s Jennifer Herz at 860.244.1921 or jennifer.herz@cbia.com.