Americans perceive health insurance distinctly compared to other forms of insurance. When someone boasts about their excellent health insurance, they typically mean their policy covers an extensive range of medical services—everything from eyewear and dental care to preventive care and routine check-ups. In contrast, other types of insurance, such as homeowners insurance, are designed to cover major issues, with routine expenses like lawn mowing and gutter cleaning paid out-of-pocket.
This disparity between health insurance and other insurance types is further complicated by state and federal mandates that dictate the coverage policies must provide. The Affordable Care Act (ACA), or Obamacare, mandates that every health insurance policy include ten specific types of coverage. Additionally, states impose their own mandates, often overlapping with federal requirements. For instance, a few years ago, Wyoming had 32 health benefit and provider mandates, Montana had 31, and Idaho had 10.
Rather than government-mandated insurance programs covering nearly all health-related activities, health insurance should function similarly to other indemnity insurances, such as auto, homeowners, and life insurance, which are primarily used to mitigate risk. Just as it would be impractical to use car insurance to pay for gasoline or homeowners insurance to cover lawn care, state and federal governments should reconsider the notion that health insurance should encompass all health-related expenses. True indemnity insurance should be reserved for catastrophic events and emergencies, while routine healthcare services should be paid for out-of-pocket.
Each mandate increases the overall cost of health insurance, and not all mandates are necessary for everyone. For example, a healthy, unmarried 30-year-old man does not need obstetrical coverage, yet he pays for it in his insurance plan. Similarly, women do not require prostate cancer screenings.
Mandates often result from lobbying by politically influential interest groups, pushing elected officials to include their services in every insurance policy. These mandates limit competition, drive up prices, and restrict patient choices.
Proponents of mandates argue that it’s impossible to predict a patient’s future healthcare needs, so the government should ensure comprehensive coverage by law. While the future is uncertain, a catastrophic, high-deductible insurance plan could cover major unforeseen medical issues. Affordable auto and homeowner insurance policies, except in rare circumstances, provide extensive coverage for significant problems, offering individuals and families substantial financial protection.
Health Savings Accounts (HSAs) offer a practical solution, allowing individuals to save for routine healthcare expenses. These accounts require the purchase of a high-deductible catastrophic policy for major medical expenses but enable tax-advantaged savings for everyday medical costs. Savings in an HSA can accumulate annually and transfer with individuals from one job to another.
The number of mandates varies by state, and unlike other types of insurance, health insurance is sold state by state. Allowing the interstate purchase of health insurance would be a logical first step, significantly expanding patient choices and enhancing market competition. State-mandated coverage would still be available, but consumers would have the autonomy to decide whether to purchase it.
Americans across the political spectrum recognize that the escalating cost of healthcare is a fundamental problem. Reducing or eliminating government health insurance mandates could be a decisive step toward lowering these costs.
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