Yesterday, during an NPR segment about the impact of Sen. John McCain’s (R-AZ) proposal to allow insurance companies to sell policies across state lines, Michael Cannon of CATO and Rep. John Shadegg (R-AZ) both repeated the false claim that benefit mandates significantly increase the costs of health insurance:
CANNON: [Some states require that a health plan] includes chiropractic coverage, in vitro fertilization, which is very expensive and a lot of people find morally objectionable but a lot of states require that.
SHADEGG: You’re going to allow them [insurance companies] to bring a policy into your state that is going to cover basic services but might not cover hair prostheses, might not cover aroma therapy, might not cover acupuncture. That means that policy will cost less money and enable people to afford it.
Very few states actually cover hair prostheses (10), in vitro fertilization (13) and acupuncturists (11). In fact, after the second presidential debate, in which McCain also suggested hair prostheses drive-up health care costs, the Wall Street Journal Health Blog contacted William Parsley, “a dermatologist who is president of the International Society of Hair Restoration Surgery, a nonprofit group of about 700 hair-restoration doctors world-wide.” According to Parsley, “insurance payment for cosmetic hair is the real joke. Parsley said that only hair restoration as part of reconstructive surgery necessitated by severe burns, serious injuries and accidents is customarily covered by insurance“:
Such reconstructive surgeries account for about 1 to 2% of hair transplants performed, he said. What about the gold-plated health insurance, we asked. Ever see any of that? Yes, he said, twice in 34 years of practice that insurers paid for a patients’ cosmetic hair transplant. The most recent instance was two decades ago, though.
Are we alone in withholding payment for hair loss? Parsley says no, cosmetic hair transplants aren’t covered in countries with government-run health systems. “They don’t even offer that in Canada,” he said.
What’s more, conservative claims that benefit mandates significantly increase the cost of health insurance fly in the face of fact. According to state experiences and an exhaustive study by the Congressional Budget Office, “eliminating some of the most expensive mandates — maternity, mental health, and preventive care for children — would bring” only a small reduction to health care premiums. The CBO report found that “the impact in the small group market is no more than five percent of premiums” while California’s Health Benefit Review Program “determined that eliminting all 44 of California’s mandates would reduce premiums by no more than 4.8 percent.”
In short, insurance companies lose money by insuring sick people, not though benefit mandates.