Raise Price of Health Insurance, Senators Urge

Well, that’s not exactly how they put it. Nor is it how the journalists put it. The Wall Street Journal, for instance, explained it this way:

A bill introduced by a bipartisan group of senators – Pete Domenici (R., N.M.), Edward Kennedy (D., Mass.) and Mike Enzi (R., Wyo.) – doesn’t mandate that group health plans cover mental illness. Instead, it requires that plans, if they cover both mental and physical illnesses, treat both with “parity,” or similar benefits, such as deductibles, co-payments and treatment limitations.

AP story here. Neither the senators nor the journalists noted that such mandates drive up the cost of health insurance. So they didn’t have to address the question of why they would be seeking to make health insurance more expensive even as they decry the number of Americans without health insurance.

But it isn’t very hard to see why mandates would raise costs. The more things an insurance policy is required to cover, the more it’s going to cost. “Mental health” is especially vulnerable to cost inflation, as it can cover so many things.

It’s great to have an insurance policy that covers everything you might possibly need. But why should everyone be required to buy a Cadillac policy? Why shouldn’t people be allowed to buy Chevrolet policies if that’s what they want? As economist Merrill Matthews notes, “There’s a range of different things states have required health insurance to cover, including chiropractors, podiatrists, nurse midwives, drug and alcohol abuse counseling, and even, in a few states, hairpieces for people who’ve had cancer treatments.” People could save money if they could buy health insurance policies that didn’t cover some eventualities, such as pregnancy or drug rehab.

But don’t worry–as soon as the Mental Health Parity Act passes, senators will go right back to criticizing insurance companies for their high prices and calling for government to make insurance “affordable” for more people.