Why Costs are Rising

Mandates & Regulations

Mandated benefits result in increased costs because:

• Everyone’s premium increases to cover the cost of providing the new benefit.
• The demand for the mandated benefit increases dramatically once it is available to everyone.

Mandates can also dictate the processes an insurance company must follow. For example, the Health Insurance Portability and Accountability Act - Administrative Simplification (HIPAA-AS), which went into effect in April 2003, requires health care providers, including insurance companies, to follow certain guildelines to maintain the privacy of their customers or patients. Another portion of HIPAA-AS standardizes how claims are processed electronicially.

Wellmark Blue Cross and Blue Shield estimates that its cost of complying with the administration simplification portion of HIPAA will exceed $20 million in 2003.