Saturday, October 6, 2007

Requiring health insurance purchases

From Hillary Clinton and John Edwards to Mitt Romney and Arnold Schwarzenegger, politicians across the spectrum have tried or vowed to solve America's health-care woes by enacting an individual mandate--a law requiring every adult to purchase health insurance. ...

Individual mandate supporters typically justify the policy by citing the problem of uncompensated care. When uninsured patients receive health services but don't pay for them, the rest of us end up footing the bill one way or another. So advocates of insurance mandates contend, plausibly enough, that we should make the free riders pay.

But how big is the free-rider problem, really? According to an Urban Institute study released in 2003, uncompensated care for the uninsured constitutes less than 3% of all health expenditures.

Of course, it will not work exactly as planned. ... 47 states require drivers to buy liability auto insurance, yet the median percentage of uninsured drivers in those states is 12%. ...

None of this means the uninsured are not a problem. Yet the true issue isn't that they cost the rest of us too much. It's that they simply get less care than most people (one reason uncompensated care is such a small fraction of health-care spending). And if the real concern is making health insurance and health care available to those in need, we should focus on reducing health-care prices and insurance premiums. The individual mandate is, at best, a distraction from that goal. ...

To enact any mandate, legislators and bureaucrats must specify a minimum benefits package that an insurance policy must cover. ... A better approach to health reform would focus on removing mandates that drive up insurance premiums. States ought to repeal some or all of their mandated benefit laws, allowing firms to offer lower-priced catastrophic care policies to their customers.
--Glen Whitman, BusinessWeek, on misdirected healthcare reform

1 comment:

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