Health care reform opponents hate the idea of mandated benefits. From a free market purist’s standpoint it’s a bad idea to tell health insurers what they need to include in their products because it will tend to drive up costs and interfere with the ability of suppliers to meet market demand. This opposition to mandated benefits is a major reason that so many in the GOP are enamored of the idea of allowing health plans to sell policies across state lines.
As someone with an undergraduate degree in economics and an MBA, I really and truly do understand this free market argument and am sympathetic to it. But it’s important to take more than free market orthodoxy into account when making policy decisions.
Let’s take a look at a bill before the Massachusetts legislature that would mandate health plans to include coverage for hearing aids and related services for children 21 and under. A free market purist might attack the mandate on the following grounds, among others:
- It forces people who don’t have children, or who have children with normal hearing, to buy a benefit they don’t want or need, driving up premiums
- A provision like this retards innovation and boosts costs by keeping hearing aids within the realm of regulated medical devices and discouraging the development of low-cost consumer electronics solutions
Those arguments have some truth to them. But I find the counterarguments more persuasive:
- An actuarial analysis by Compass Health Analytics indicates that the mandate will increase premiums by about 0.008 percent or about 4 cents per member per month. That’s about the cost of one postage stamp per member per year. So in practice the mandate does not drive up premiums, and even a dozen mandates like this one would have no real impact
- Hearing aids work. They improve quality of life and they make it easier for children to develop their brains and to learn in school. Having access to hearing aids promotes equality of opportunity. The evidence on the specific economic impact of hearing aids is hard to pin down (especially because doing a controlled trial where some kids are denied access would be unethical) but in general investments in youth that enable them to learn better have a terrific societal return on investment
I will gladly trade off a tiny bit of economic purity for a real gain in equality of opportunity and the potential for a meaningful pay-off in societal wealth in the long-term.