Issue Report: Health insurance mandates

Should govts mandate that people buy private health insurance, or face penalties?

In the United States, as well as some other countries, mandating that individuals buy individual health insurance has been proposed as a solution to high numbers of uninsured (in the US, the number stands around 47 million). The proposal is seen as both a way to force people to obtain something that is seen as necessary in a modern society, as unexpected illnesses or accidents can suddenly overwhelm an individual with medical bills and frequently lead to bankruptcy. It is also seen as a way to reduce the burden that the uninsured place on the insured and on taxpayers, who may have to pay higher premiums or taxes to pay for the emergency visits of the uninsured. Supporters also generally see mandates as one of the only ways to ensure universal coverage. Yet, opponents worry about mandates violating individual and constitutional rights. They argue that an individual living in a society should not be forced to buy insurance “just because they are alive”. Additional concerns surround the efficacy of mandates, both in regards to how mandates can compel improvements in individual behavior and in regards to the enforcement of mandates when people do not comply. Should the uninsured and struggling be financially punished when they fail to obtain insurance? Such a prospect strikes opponents as counter-productive, by financially penalizing those that cannot obtain insurance because of poor finances. In 2007, Massachusetts became the first state in the US to implement mandates. California began considering the idea soon after. An individual mandate found its way into the Affordable Care Act. The Trump Administration repealed the ACA and it is unlikely that an individual mandate will be included in whatever replaces the ACA.

Individual rights: : Are insurance mandates consistent with individual rights?

Mandates counteract insurers denying coverage to the unhealthy

Linda J. Blumberg, Ph.D., and John Holahan, Ph.D. "insurers create

exclusion periods for coverage of preexisting conditions, benefit riders that permanently exclude particular types of care, higher premium rates or cost-sharing requirements for people with health problems, and outright denials of coverage. […] If we required that every person obtain at least a minimum package of health insurance benefits — that is, issued a so-called individual mandate — we would eliminate adverse selection, and these barriers would become unnecessary and, in fact, indefensible.”

Uninsured increase costs for all; mandates are appropriate.

The uninsured do two things that add to costs. First, when they do go to the hospital, they go to the emergency room, which is paid for by the taxpayers in most cases. Second, by not contributing money to the general risk pool, the insured have a smaller pool of resources to draw on when they get sick, meaning that insurance companies have to increase premiums.

Uninsured degrade care for all; mandates appropriate

Kyle B. Jones. "Mandates necessary for reform, cost control." The Salt Lake Tribune. October 2, 2009

“When a significant number of patients is unable to pay for care, such as the 20 percent of Americans currently in that situation, not only do costs increase for everyone but quality of care decreases, as limited human and material resources are drained to support those unable to financially contribute to the system. […] Evidence strongly supports that these issues already significantly affect all of us, directly or indirectly. When someone without insurance gets sick, we all get to pay the price.”

Mandates limit freedoms of few to protect freedoms of many

Kyle B. Jones. "Mandates necessary for reform, cost control." The Salt Lake Tribune. October 2, 2008

“While some complain about the loss of personal freedoms for a few, avoiding mandates would lead to further unnecessary yet significant financial burdens for everyone.”

Mandatory insurance violates right of individual judgement

Paul Hsieh. "Mandatory Health Insurance: Wrong for Massachusetts, Wrong for America". The Objective Standard. Fall 2008

“Mandatory insurance violates the rights of insurers and individuals to act on their own judgment. […] A right is a legitimate freedom of action—a freedom of action necessary for the maintenance and furtherance of human life. The right to act on one’s judgment—which means, the right to act on one’s basic means of survival—is one’s basic right. Mandatory insurance violates this right by forcing insurers to sell and customers to purchase insurance on terms and prices dictated not by their own judgment, but by government decree, thus destroying the very conditions that make insurance a value. This is what has caused the disastrous economic consequences in Massachusetts.”

Mandatory insurance violates right to engage in contracts

Paul Hsieh. "Mandatory Health Insurance: Wrong for Massachusetts, Wrong for America". The Objective Standard. Fall 2008

“Mandatory insurance violates individual rights in several ways. First, it forbids individuals and insurers from contracting voluntarily in a free market. In Massachusetts, individuals must choose between one of only a few government-approved plans.35 The terms of these state plans were not determined by patients and insurers negotiating in a free market. Instead, major elements, such as the prices of the plans and details of prescription drug coverage, were decided by the ten members of the government-appointed “Connector” board after ferocious lobbying from pressure groups including “business, labor, medical professionals and needy patients.”36 This is a classic example of what philosopher Ayn Rand called the ‘politics of pull.'”

Free-riders: : Will mandates help solve problem of free-riders?

Mandates protect taxpayers from burden of uninsured

Stuart M. Butler, an adjunct professor in public policy at Georgetown University and the vice president for domestic policy at the Heritage Foundation, wrote on the New York Times' Room For Debate in June of 2009

“A mandate to buy what? In automobile insurance it’s typically to protect other people against the damage the driver might do to them. The parallel in health is a mandate for me to buy insurance to cover emergency and catastrophic costs that you (taxpayers and insured people) would be stuck with if I can’t pay my hospital bill.”

Uninsured free-riders are no big problem; mandates unnecessary

Glen Whitman. "Hazards of the Individual Health Care Mandate." CATO. September/October 2007

“how big is the free-rider problem, really? First, we should note that not all free riders are uninsured. In fact, people with insurance consume almost a third of uncompensated care. Second, not all care received by the uninsured is paid for by others. Analysts at the Urban Institute found that the uninsured pay more than 25 percent of their health expenditures out of pocket. […] So how much uncompensated care is received by the uninsured? The same study puts the number at about $35 billion a year in 2001, or only 2.8 percent of total health care expenditures for that year. In other words, even if the individual mandate works exactly as planned, it will affect at best a mere 3 percent of health care expenditures.”

Universal care: : Is mandatory insurance a good means to universal care?

Mandates are best way to get to universal coverage

Bradley Herring, a health economist at Johns Hopkins University: “Without an individual mandate, you’re never going to get to universal coverage.”

The Kansas City Star reported in September of 2009: “appears to be the best way to ensure coverage for the most people.”[1]

General statements in favor of health insurance mandates

Senate Finance Committee Chairman Max Baucus, a Democrat who is helping write healthcare legislation, in a March 2009 speech to the Center for American Progress think tank said, “An individual obligation to get health coverage is essential.”[2]

Mandates will not produce universal care as many will not comply

Glen Whitman. "Hazards of the Individual Health Care Mandate." CATO. September/October 2007

“The Problem of Noncompliance […] of course, the mandate will not work exactly as planned. As anyone who’s ever driven over 55 mph knows, mandating something is not the same as making it happen. Realistically, some individuals will not comply. […] Forty-seven states currently require drivers to purchase liability auto insurance. Do 100 percent of drivers in those states have insurance? No. For states with an auto insurance mandate, the median percentage of drivers who are uninsured is 12 percent.”

Premise of insurance mandates, that health care is a right, is false

Many argue that health care is a right, and thus that universal health care is a necessary provision. This is then used to justify mandates as a means to universal care. But, health care is not a right, as only things that could be consider “natural”, “innate”, or “God-given” can be considered rights, and health care does not qualify as such.

The struggling? Is a mandate helpful or harmful to the financially struggling?:

Mandatory insurance can be subsidized for the struggling

Linda J. Blumberg, Ph.D., and John Holahan, Ph.D. "The Individual Mandate — An Affordable and Fair Approach to Achieving Universal Coverage." The New England Journal of Medicine. July 2, 2009

“Although the shortcomings of the system for the high-cost population are many and well documented, most people who are excluded from the current health insurance system have low incomes. Two thirds of the uninsured have incomes below 200% of the federal poverty level (100% being $10,830 for an individual and $22,050 for a family of four in 2009).2 With the average employer premium today running approximately $4,800 for an individual and $13,300 for a family (with estimates based on average premiums for 2006 with adjustment for inflation3), such an expense would amount to 22 to 30% of income for those at 200% of the poverty level — much too high to be considered affordable. For people with lower incomes, such expenses would be even more crushing. As a consequence, the inclusion of everyone in the health insurance system will require substantial government subsidies to Americans with modest incomes. Without such assistance, a requirement to participate in coverage would be unfair and unjustifiable. A requirement for all to enroll in coverage must therefore carry with it a government commitment to make adequate coverage affordable at all income levels.”

The struggling uninsured can be exempted from penalties.

The financially struggling, those beneath a certain income level, can be exempted from penalties for lacking health insurance.

The struggling can be exempted from insurance mandate.

Some individuals in certain exceptional cases can also be exempted from the requirement to obtain health insurance. This, at a minimum, is an option that can be used to balance certain considerations, which may include the expense of subsidizing insurance for poor individuals.

Punishing uninsured further harms struggling

Grace-Marie Turner. "Should the United States Mandate Health Insurance...or Not?". MedScape. April 4, 2008

“An individual mandate would inject much more government control into our health sector and would require onerous enforcement provisions, like garnishing people’s wages.[4,5] Americans are struggling to afford decent housing, child care, and other necessities. Requiring them to buy health insurance before we address its high costs would further burden the workers and families we’re trying to help.”

Mandate deters uninsured from going to hospital, receiving penalty

"Mandatory health insurance?" A Dragon in Sheep's Clothing. July 3rd, 2009

“If they will be fined when the healthcare system learns they are uninsured, why would anyone who cannot afford health insurance ever go to a doctor? So really, the problem of folks without health insurance is not fixed by a mandate.”

Mandating health insurance is socially regressive

Marcia Angel. "Should health insurance be mandatory". New York Times. June 4, 2009

“A mandate is also extremely regressive. In Massachusetts, mandated insurance and co-payments can amount to nearly a third of income. Income taxes apportion the costs of public services more fairly, and I see no reason not to adopt that approach in paying for health care. To be sure, President Obama has said he would exempt people from the mandate who couldn’t afford to purchase their own health insurance. But aren’t these precisely the people most in need of it? Massachusetts has exempted 62,000 people from the mandate for that reason.”

Economics: : Do mandates reduce or increase costs/price of insurance?

Mandatory health insurance ensures appropriate pooling of risk

Keith Girard. "Health Care: The Case for Mandatory Universal Health Insurance." All Business. April 2 2009

“‘Insurance, in its simplest form, works by pooling risks: many pay a premium up front, and then those who face a bad outcome (getting sick, being in a car accident, having their home burn down) get paid out of those collected premiums,’ explained Katherine Baicker, a professor of health economics at Harvard’s School of Public Health. […] Insurance works because not everyone will fall sick at the same time, so it is possible to make payments to those who do fall sick even though their care costs more than their premium, by tapping the pooled insurance premiums. Thus, the system is undermined by the uninsured, both healthy and unhealthy. […] when healthy individuals choose to go uninsured, the model breaks down as well, because they are limiting the pool of reserves available for those who are sick. If they wait until they are sick to get insurance, they defeat the purpose of insurance, too. That’s why Massachusetts, one of the states leading health care reform efforts, requires universal participation in its health program.”

W/o mandates insurers focus on risk instead of costs

Linda J. Blumberg, Ph.D., and John Holahan, Ph.D. "The Individual Mandate — An Affordable and Fair Approach to Achieving Universal Coverage." The New England Journal of Medicine. July 2, 2009

“the voluntary insurance system has also distracted insurers from developing incentives and mechanisms for efficiently managing health care costs. Because total health care expenditures are so concentrated — the most expensive 5% of the population accounts for half of aggregate health care spending, whereas the bottom 50% of spenders account for only 3%1 — the gains to insurers of avoiding the sick outweigh any possible gains from managing their care. As a consequence, resources have been devoted to such avoidance at a direct cost to effective care management. National health care costs continue to grow at rates well above inflation, but there has been precious little incentive for the private sector to devote its innovative energies to controlling them. And identifying ways to provide care more effectively and efficiently to people with serious medical needs is the only path to achieving the savings we all seek, since it is on such care that the bulk of the system’s dollars are spent.”

Mandates include young and healthy, spread risk and costs

Ceci Connolly. "Like Car Insurance, Health Coverage May Be Mandated." Washington Post. July 22, 2009

“Bringing everyone into the insurance pool — particularly young, healthy customers — spreads the risk and lowers overall costs. ‘That will make it more affordable for everyone,’ Bradley Herring, a health economist at Johns Hopkins University.”

Insurance mandates require costly government subsidies

Paul Hsieh. "Mandatory Health Insurance: Wrong for Massachusetts, Wrong for America". The Objective Standard. Fall 2008

“Costs to the state government have skyrocketed and are projected to run hundreds of millions of dollars over budget. Because the mandated insurance is so expensive, the government has had to subsidize the costs of the premiums not only for lower-income residents, but also for residents with incomes as high as $60,000 for a family of four—which is three times the Federal Poverty Level.17 The state had expected a ‘significant drop in spending . . . for the uninsured” but has since acknowledged that this ‘is not going to happen to any large extent in 2009.’ Instead, overall costs to the state have risen by more than $400 million, 85 percent more than originally projected.”

Insurance mandates force citizens to buy special-interest benefits

Paul Hsieh. "Health care in Massachusetts: a warning for America". Christian Science Monitor. September 30, 2009

“Under any system of mandatory insurance, the government must necessarily define what constitutes acceptable insurance. In Massachusetts, this has created a giant magnet for special interest groups seeking to have their own pet benefits included in the required package. Massachusetts residents are thus forced to purchase benefits they may neither need nor want, such as in vitro fertilization, chiropractor services, and autism treatment – raising insurance costs for everyone to reward a few with sufficient political pull.”

Paul Hsieh. "Health care in Massachusetts: a warning for America". Christian Science Monitor. September 30, 2009

“The Massachusetts plan […] violates the individual’s right to spend his own money according to his best judgment for his own benefit. Instead, individuals are forced to choose from a limited set of insurance plans on terms set by lobbyists and bureaucrats, rather than those based on a rational assessment of individual needs.”

Only markets, not mandates, reduce cost of insurance

Grace-Marie Turner. "Should Health Insurance Be Mandatory?" New York Times. June 4, 2009

“But the kind of centralized, government-dominated proposals he endorses elsewhere in his letter have a poor track record of producing the savings he needs for this plan to work. And there is no evidence that Congress will significantly cut the growth of spending in Medicare or Medicaid nor will more spending on information technologies, disease management and prevention produce the needed savings.”

"Tax": : Are health insurance mandates not like tax increases?

Mandating insurance does not constitute a "tax increase"

President Barack Obama said in September of 2009: “For us to say that you’ve got to take a responsibility to get health insurance is absolutely not a tax increase. Right now everybody in America, just about, has to get auto insurance. Nobody considers that a tax increase.”[3]

Mandatory health insurance is like a tax on just being alive

"Mandatory health insurance?" A Dragon in Sheep's Clothing. July 3rd, 2009

“there’s no option with mandatory health insurance. You’d have to get it. The only way you can opt out is to die. So really, it’s like we’re being taxed simply for being living, breathing U.S. citizens living in this country.”

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