Special interest pressures on state legislators often lead to legislation which creates waste and inefficiency in the market for health insurance.

For example, there are more than 1,000 state-mandated health insurance benefits in the United States. These are laws requiring health insurance to cover particular services, even if the people buying the insurance don't want those services. Various mandates cover providers ranging from acupuncturists to chiropractors. They cover services ranging from alcohol and drug abuse treatment to invitro fertilization. They cover heart transplants in Georgia, liver transplants in Illinois, hair pieces (wigs) for chemotherapy patients in Minnesota, marriage counseling in California and pastoral counseling in Vermont.

One problem with mandates is that they drive up the costs of health insurance and price many people out of the market altogether. In fact, studies show that as many as one out of every four uninsured people is uninsured because of the premium-increasing effects of state mandates. Another problem is that they make it impossible for people to buy insurance tailored to individual and family needs.

One of the most active areas of state mandated benefits is in the area of mental health. In fact there are more mental health mandates than there are for any other type of illness. For example, 42 states have laws requiring insurers who cover the services of a psychiatrist to also cover the services of psychologists. Payment for the services of social workers is mandated in 20 states; payment for professional counselors is mandated in 15 states; and marriage therapy is mandated in 10 states. Two states require coverage for pastoral counselors.

These types of laws make it harder for a health plan to control overuse and abuse of insurance coverage. That means it is harder to control costs. In response, insurers may restrict coverage (e.g., limit the number of visits or the number of days of hospitalization) or eliminate whole categories of coverage. (Although 30 states now require mental health parity - under which mental health coverage must have the same limitations as coverage for physical health services.)

Another type of mandate covers facilities. For example, Alcoholics Anonymous (AA) is universally praised and the services are free. If AA can deliver services as good or better than a high-priced rehab clinic, then obviously it is more efficient to use AA. But many state laws say that if an insurer covers one facility's services it must cover all other facilities' services, including those that charge high fees.

Another problem is "guaranteed issue" laws that require insurers to sell coverage to people who are already sick. Suppose an insurer covers alcohol-and-drug-abuse treatment. A guaranteed issue law would force the insurer to accept buyers who are already enrolled in rehab programs and just want to get their bills paid. At first glance, guaranteed issue may seem like a humane thing to do for uninsured people who are sick. But with guarantee issue there is no reason for healthy people to obtain insurance and pay expensive premiums. They can simply wait to purchase insurance until after they get sick. And if the only people in insurance pools were sick people, the premiums would have to be enormously high - so high that, in paying them, enrollees would not really be buying insurance; they would be paying premiums roughly equal to the cost of their care.

As a practical matter, guaranteed issue legislation forces up the cost of insurance and induces insurers to restrict coverage. As a result, healthy families who fear that a son or daughter might develop a problem cannot buy alcohol-and-drug-abuse coverage for a reasonable price.

Bottom line: because of state laws, people cannot get the kind of mental health coverage they want and need for a price they can afford.

• This is an argument for letting the market work, i.e., for letting insurers sell the kind of insurance coverage buyers want to buy.

• One could argue the federal government should override state laws that prevent access to efficient, low-cost mental health insurance.

No one denies that state mandated benefits are the product of special interest pressure. It is not primarily patients who lobby for these laws; it is the providers who are going to get the fees who lobby.

Even so, mandated benefit laws may produce more good than harm. For example, laws that require coverage for mental health services may be an antidote for the argument from market failure. If employers tend to be biased against coverage for mental health services, mandates may offset that bias.

Some defenders of guaranteed issue laws believe these laws provide access to health care for people who would otherwise be uninsured and that this benefit is worth the havoc it creates in health insurance markets. Also, one could argue that these laws are necessary to combat the distortions of an employer-provided insurance system in which people automatically lose coverage whenever they switch jobs. This distortion is considered more fully in the next argument.

A more basic objection is that a federal override would elevate all these conflicts to the national level. Special interest hordes that previously descended on state capitols would now focus on the capital in Washington, DC. And if the special interests won any of the battles in Washington, the ill effects would harm people in every state.

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