Pricing Americans Out

hen the Mental Health Parity Act was forced through Congress in 1996 by Senator Pete Domenici as an attachment to a virtually disrelated Senate spending bill, planned hearings scheduled for one week later were circumvented.

Testimony prepared against the Act included the experience of Xerox Corporation, which, after instituting parity in 1988, saw 40 percent of their total benefits consumed by mental health services. The largest increase was for “adjustment disorders” of employees coping with divorce or bereavement—thus denying many basic medical benefits and driving up premiums.

The Xerox experience is but one in the mounting volumes of statistical evidence of the economic damage caused by mandated benefits.

Economic experts have conducted studies which show that mandated benefits—of which mental health are the most expensive—are driving up premiums and pricing millions of Americans out of the insurance market.

According to Pete du Pont, former governor of Delaware and Chairman of the National Center for Policy Analysis, “By one estimate, one out of every four uninsured people has been priced out of the market by state-mandated health insurance laws.”

A sampling of available studies includes:

• An in-depth study published by the American Legislative Exchange Council found that as many as 25.2% of the nation’s 40.3 million uninsured are without health insurance because of mandated benefits.

• A study conducted by the educational foundation of the 600,000-member National Federation of Independent Business found that state benefit mandates currently on the books can increase premiums by as much as 30 percent.

• An analysis conducted in November 1997 by the Lewin Group for the American Association of Health Plans estimated that each one percent increase in private insurance premiums for employers will be associated with a 400,000 increase in the number of persons without insurance.

• Citizens for a Sound Economy found in a study that the cost of mandated benefits also prevents one in five firms from offering health insurance to its employees.

Studies conducted by economic experts show that mandated insurance benefits are driving up premiums and pricing millions of Americans out of the market.

	The rise in the percent of Americans, from birth to age 64, without health insurance, from 1987 to 1995.

	Drop in percentage of family health insurance fully financed by their employer, from 1988 to 1995.

	The Drop in the percentage of a single employee coverage fully financed by their employers, between 1988 and 1995.

	* Based on a standard family policy, without mandates, costing $3,500 per year.