Thursday, March 20, 2008

Profiles in Legislative Courage - voting against insurance mandate to fund autism

(For links to documentation, go to and click on “AZ Blog” at top.)

25 legislators took a courageous stand this week by voting against a bill that would force insurance companies to cover the diagnosis and treatment of Autism Spectrum Disorders (ASDs). The passage of the ASD mandate is a textbook example of the phenomenon known in public choice economics as Concentrated Benefits and Diffused Costs (CBDC).

Persons who stand to get a lot of money from a piece of legislation have a strong incentive to expend resources (mainly time and money) to lobby in favor of that legislation. Opposition to a piece of legislation tends to be very weak if the costs of the legislation are spread out thinly among taxpayers or consumers.

The ASD mandate will force insurance companies to pay up to $50,000 annually for behavioral therapy for children nine and younger, and $25,000 annually for older children. For families with children suffering from ASDs, that is a huge benefit. It is obvious why they would lobby vigorously for passage of the bill, and even participate in a candlelight vigil outside the Legislature.

At the same time, the costs of the ASD mandate (which may be around $50 annually per insured*) will be widely diffused. Insurance companies will pass on much of the costs to employers who buy insurance policies, and employers will pass on much of those costs to workers. Some workers will pay by losing out on wage increases, while others will pay by being unemployed.

But even if workers had known that the ASD mandate was moving through the Legislature, and that it would cost them real money, they would not have gone down to the Legislature to lobby in an effort to save themselves $50 a year. Such is the insidious nature of CBDC.

Of course, everything counts in large amounts. The cumulative burden of existing mandates already cause insurance premiums in Arizona to cost hundreds of dollars a year more than they would otherwise, resulting in greater numbers of uninsured workers. The victory of the ASD activists will encourage the victims of other diseases to lobby for new insurance mandates, and so the rising costs of mandates will continue to add to the ranks of the uninsured.

Insurance mandates are welfare: the forced transfer of resources from one set of persons to another. As such, the Legislature should have had an honest debate about whether ASD victims should get welfare or rely on private charities. If the Legislature had voted for welfare, those benefits should have been distributed through the Department of Economic Security, or through AHCCCS.

Instead, by hiding a welfare transfer in the insurance code, the Legislature has chosen to disrupt the efficient operation of the insurance market, which performs the vitally important social function of risk allocation.

Autism is a terrible disease, and the teary testimonies in favor of the mandate were sincere and heartfelt. Indeed, they were so moving that some otherwise reliable fiscal conservatives ended up voting in favor of the bill, even though they normally oppose welfare and heavy-handed interference in private markets. In the Senate, only six stalwarts managed to resist the emotional blackmail by the ASD activists.

Explaining his vote against the bill in the Senate Appropriations Committee, Sen. Jack Harper (R-Surprise) stated, “I have never voted for an insurance mandate since I have been in this body. My first year in this body it was part of our majority agenda that we would not support insurance mandates because insurance costs were so sky high now because we have 20-plus insurance mandates. This particular one coming up makes me feel like a monster, but I still have to vote ‘no’.”

Harper is not a monster. Neither are the other 25 members of the Legislature who had the courage to vote No on this bill. If anything is monstrous, it is a government spoils system in which Legislators rob Peter to pay Paul, vote to drive up the cost of insurance for working Arizonans, and allow themselves to believe that they’re not really handing out welfare.

--Tom Jenney is Arizona director of Americans for Prosperity (

*The JLBC estimates that the mandate may cost the Arizona Department of Administration $3.5 million annually for a pool of 65,250 enrolled members—or just over $50 per insured.

1 comment:

Trish Groe said...

Hey, it's the blog!

FYI, if I subscribe through a "reader" or RSS feed, because you use a light color font, the posts are almost unreadable against the white background.