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June 4, 2003

Study: 'Mental-health' mandate would increase health-insurance costs; Council strongly opposes the bill

A controversial proposal to require health insurance to cover expanded health coverage for mental illness and substance abuse would significantly increase costs of health insurance, a new analysis shows.

The Business Council is strongly opposing the bill (A.8301-Tonko/S.5329-Libous). The Council opposes health-care mandates in general because they inflate the cost of health insurance and make it more likely that many individuals and businesses will be unable to afford any health insurance at all, said Elliott Shaw, The Council's director of government affairs and health-policy lobbyist.

The new mandate would increase health insurance costs 3-3.5 percent, according to the new analysis by the New York State Conference of Blue Cross and Blue Shield Plans. That could amount to more than $90 a year per member, depending on the product and type of coverage provided, the conference added.

"A cost increase of this magnitude would undoubtedly increase the number of uninsured in New York," said Mark Amodeo, conference spokesman.

Another recent study, by the Employer Alliance for Affordable Health Care, also concluded that the mandate would increase health insurance costs around 3 percent.

In its analysis, the conference noted that lower estimates touted by advocates supporting the law did not reflect the full costs of the mandate, and were produced in a study paid for by pro-mandate activists.

The conference noted that its analysis considers the actual experience and utilization trends of various plans in New York.

In a memo of opposition to the mental-health mandate bill, The Council said the bill would further drive up health-insurance costs and increase the total number of uninsured New Yorkers.

This bill would require that every insurance policy in the state provide full coverage for the diagnosis and treatment of mental disorders, including nervous disorders, emotional disorders, and dependency on alcohol or other drugs. The bill would also mandate that policies impose no limits on the coverage of mental disorders that are not imposed on physical disorders.

If passed, the mandate would add at least $200 million to skyrocketing insurance costs. That $200 million is in addition to $130 million in new taxes, fees, and "assessments" on health care that are part of the state budget.

The bill is cost-prohibitive, The Council's memo said. Companies that believe they would like to-and can afford to-offer a higher level of mental health benefits already can buy an insurance rider. And many insurance plans offer mental health and substance-abuse benefits.

Already the state has over 30 mandated benefits that significantly increase the cost of health insurance. The average family in New York pays more than $1,000 per year to cover the cost of mandated services, according to the study by the Employer Alliance for Affordable Health Care.

Moreover, there is not a consensus that mandating full mental-health coverage would be the most effective health-policy option.

"This [mandate] could lead individuals to receive services that are not shown to be effective or have been shown to be ineffective leading to wasted health care dollars and false hope," said Donna Novak, author of the Employer Alliance study.

Employers in the state will face the real possibility of dropping coverage or passing the cost along to employees as rates continue to rise. These added costs will also contribute to an increase of uninsured New Yorkers-a figure that already stands at more than three million. As health insurance becomes more expensive, New Yorkers drop out of insurance plans because the cost, even when shared with their employer, is too high, The Council's memo said.