Mandatory Health Insurance Now!

Reason, Feb, 2005 by Edwin Krampitz, Jr., Richard Bellerose, Peter Rousmaniere, Ronald Bailey

Ronald Bailey advocates "Mandatory Health Insurance Now!" (November). So did some Republicans in Congress during the height of the Billarycare proposal 10 years ago, and so has The Economist. Here's why they're all wrong.

Bailey likens a mandate that adults buy health insurance to requirements for car and home insurance. This is a bad analogy. If you don't drive or own a car, you don't have to buy auto insurance. If you aren't actually paying a mortgage, you don't have to buy home insurance.

Bailey is also guilty of bad math. He claims policies covering catastrophic expenses "typically" cost less than $300 per month for a family of four. A typical figure for just a married couple (no children, both in excellent health) is actually over $400 a month. The Richmond Times-Dispatch just mentioned the case of one couple who were quoted $1,700 per month for full coverage by Anthem, the health insurer of last resort in Virginia. Oh, and good luck getting coverage at any price if you have any pre-existing conditions or a child with medical problems. Don't forget the market: Impose a mandate, and watch premiums skyrocket as insurers take advantage.

Bailey mentions couples with income of more than $50,000 a year who "choose" to go without health insurance. Someone working for a company making that amount typically would have employer-provided insurance. A little checking would reveal that many of these people are self-employed, trying to run small businesses, or working several part-time jobs to make that amount, and that this is not what they necessarily make every year. Fifty grand is not a lot of income any more: In many areas of the country it is not enough to qualify for a home mortgage, for example. Impose a mandate, and see a lot of struggling small businesses close.

Realistically speaking, what would Bailey propose doing with those who lose their jobs and are unable to pay for this mandated health insurance? Throw them in jail? Fine them? If they can't afford insurance, how will they afford a fine? Mandating health insurance in response to the ongoing crisis in medical care is like solving the problem of affordable housing by mandating that everyone buy a house. Such a mandate is unworkable, unconstitutional, and unlibertarian.

Edwin Krampitz Jr.

Drewryville, VA

The Ronald Bailey article is interesting, but there seem to be two striking flaws in the proposal. Group health insurance in large companies protects the individual with costly conditions by including him with the less costly. As an individual, he will be dropped or his rates will soar.

As for a large deductible making people smart consumers, this only applies to people who are already putting the least strain on the system. People with big medical costs know that they are going to fulfill the deductible at the start of the year, so they have no incentive to shop around. Truth is, the healthy will not give much thought to cost until they get a nasty health surprise, and that's not the time to shop.

Richard Bellerose

San Francisco, CA

By endorsing mandatory health insurance, Ronald Bailey grabbed hold of an important plank in any effective platform of an improved health care system. But he may have promised more than it will likely deliver.

The best analogy is to the workers' compensation system in the United States, in which I have worked for some time. Coverage is not perfect, but almost all civilian workers enjoy adequate protections, including defined benefits and assurance that the employer has the financial means to honor its obligations. Gaming by workers, employers, and insurers is constrained. Except in pockets, there is no crisis of the uninsured or underinsured.

For a telling exception, look to asbestos-related diseases, which are almost entirely work-related. To sighs of relief from the state workers' comp systems, but ultimately great disturbance to the American judicial system and economy, asbestos lawyers in the 1970S won the ability to file much more open-ended product liability suits. Had asbestos been kept within workers' compensation and had personal injury law firms been less lubricated from asbestos settlements, we might today have a smaller personal injury suit problem in the nation.

But the history of workers' comp has not shown that open competition among private insurers is more successful than single payer or a mix of private and government insurance. Washington and Ohio, for example, are two of the handful of states with single-payer workers' comp systems. In numerous other states, large state-sponsored insurers compete against private insurers. At day's end, how insurance is organized does not seem to make much of a difference in employer and worker satisfaction or in relative costs.

Peter Rousmaniere

Woodstock, VT

Ronald Bailey replies: First, I want to stress that mandatory health insurance is a second-best proposal. A totally free market system would be preferable; it's just not likely politically. Mandatory health insurance is a way to stop creeping socialization and preserve private medicine.