From the American Thinker

By Linda Halderman, MD

According to the health care reform bill being debated in the U.S. Senate, there’s an easy way to solve the problem of the uninsured in this country:

1. Force Americans to buy health insurance just like we do with auto insurance.

2. Make insurance companies accept everyone who applies, including those who buy insurance only when they’re sick.

3. Don’t let insurance companies sell plans that don’t cover everything.

These three forms of health insurance regulation-individual mandates, guaranteed issue and coverage mandates-have been attempted in a number of states, including California, Massachusetts, New Jersey, New York and Washington. The results are described below.

Individual mandates: “You’ll buy it or else.”

A popular theme in the healthcare reform debate is “shared responsibility.” Attempting to increase individual responsibility, a number of states have enacted a mandate that all citizens must purchase health insurance.

The theory behind individual mandates is that insurance becomes more affordable when purchased by a larger, healthier group of applicants. Adding individuals to the risk pool who are less expensive to insure (and currently the least likely to buy it) would theoretically lower the cost for all those insured.

But in practice, individual mandates have had a different effect on what people pay for health insurance. The impact of mandates on insurance premiums is in large part a consequence of “Guaranteed Issue” described below.

Part of the problem with individual mandates is enforcement. Voters have consistently rejected mandates that would use the tax code or wage garnishment to ensure compliance.

Without “teeth,” mandates provide no compelling reason to purchase expensive, unwanted insurance policies before an individual becomes ill. And even harsh penalties would miss the unemployed and non-citizens, who represent a large percentage of the growth in the uninsured.

This has the effect of driving up costs as less-healthy individuals requiring expensive treatment expand the insurance pool, while healthy individuals avoid buying policies.

Some proponents of individual mandates try to make an analogy to the auto insurance industry. But this is not a logical comparison:

• Auto insurance is mandated only for those who drive, a far smaller pool than those who would be mandated to buy health insurance.
• Consumers shopping for auto insurance have competition on their side; policies can be purchased from insurance companies offered in other states, driving down premiums as agencies try to compete with other carriers. Inexpensive policies are available across state lines, unlike health insurance plans sold only within a single state. Bostonians are prohibited from buying North Dakota health plans that cost 60% less than those sold in Massachusetts.
• Limited coverage auto insurance policies can be purchased, offering only the liability coverage required by law rather than more expensive comprehensive plans. Under California’s Low Cost Auto Insurance Program, premiums can be less than $25 per month. State regulations bar the health insurance industry from offering low-cost plans with limited coverage even when the consumer wants that choice.
• Despite the fact that all 50 states mandate auto insurance coverage for drivers, up to 25% of state residents remain uninsured. Even with far simpler opportunities available for enforcing the auto insurance mandate (e.g., requiring proof of coverage before obtaining a driver’s license and registration), the California Department of Insurance estimated in 2003 that 14.3% of all registered vehicles were uninsured. This does not account for unregistered vehicles or those with expired registrations, of particular importance in parts of the state with a high percentage of undocumented immigrants on the road.

Governor Mitt Romney succeeded in imposing an individual government mandate on the citizens of Massachusetts. Taxpayers in that state now fund subsidies for insurance premiums that have risen more than 30% since the Governor’s plan was enacted.

Individual mandates, though popular in political rhetoric, do not address the fundamental problem people face when buying health insurance: it is expensive.

Read the rest of the article.

This entry was posted on Thursday, December 17th, 2009 at 2:04 pm and is filed under Competition, Cost, Democrats. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.