Last week the American Medical Association endorsed a health insurance mandate that would require individuals and families in the United States who could afford health insurance to purchase it. Although the mandate is largely targeted at upper-income folks, it is likely a first step toward a mandate that would require all people to purchase health insurance.
There is a one-word response to the AMA’s recommendation: Whoa!
It is premature to advocate a national health insurance mandate when the U.S. is blessed with a federal system. Under our system, state governments can act as “laboratories of democracy,” testing new policies. This gives citizens more insight into the effectiveness of a policy when deciding whether to adopt that policy nationally.
We have exactly such a situation right now regarding a health insurance mandate. Back in April Governor Mitt Romney signed into law a health insurance reform that required all people in Massachusetts to purchase health insurance. The experience of Massachusetts (and possibly a few other states that might follow suit) should give us ample information on the effectiveness a health insurance mandate.
Whether a health insurance mandate will work is a matter of considerable debate among health care policy wonks. Those in favor argue that such a mandate is a matter of personal responsibility — that individuals have a responsibility to purchase health insurance so that, if they get sick, they do not slough their medical costs off on the taxpayers. Ultimately, a mandate could save taxpayers money.
A mandate may also force policymakers to focus on the price of health insurance. When employers are expected to provide health insurance, many policymakers aren’t concerned what it will cost. But when individuals (i.e., a lot of voters) must pay for it themselves, politicians look for ways to make health insurance cheaper. For example, in Massachusetts lawmakers scaled back a lot of regulations that made health insurance more expensive for individuals under the age of 26.
A mandate may also be an area where left and fight can find common ground. For the left, it will solve the problem of the uninsured. For the right, a mandate may help this nation avoid socialized medicine in that it will reinforce the message that it is the individual’s responsibility to fund his own health care.
Opponents counter that it may lead down a slippery slope toward socialized medicine. Their logic is that as people are required to purchase health insurance, they will increasingly demand that government subsidize the cost. More government regulation and rationing of health care will inevitably follow government paying more of the health insurance bill. Then there is the matter of adding costs to the backbone of our economy, the small business owner. Starting a small business is usually a costly affair, where every penny counts. To get off the ground, small-business entrepreneurs must sometimes go without insurance to keep costs down. Given how difficult it is to start a small business and how important small businesses are to our economy, it is unwise to add to the cost of starting one up.
Opponents also point to the potential difficulty of enforcing a mandate. Most states have mandates requiring drivers to carry auto insurance. Yet states have had little success in enforcing auto insurance mandates. Roughly 15 percent of drivers do not have auto insurance. It is unclear that government will do any better with a health insurance mandate.
The American Medical Association has jumped the gun by calling for a national health insurance mandate. We do not yet know if such mandates are effective. Evidence will emerge from Massachusetts, and perhaps a few other states, in coming years. Until then, we should hold off on instituting such a policy nationally.