Irresponsible insured drive up costs
Not all uninsured Americans are the same. At one end of the spectrum are those who, despite holding a full-time job, cannot afford coverage to protect their families from illness and bankruptcy. These Americans will benefit from subsidies that will finally make health insurance affordable for all.
At the other end are those rare Americans who, despite the means to purchase insurance, risk catastrophic loss by going without. These uninsured not only endanger themselves, they drive up everyone else’s health costs.
This is true in part because the uninsured are likely to delay care until they have no choice but to seek expensive emergency room treatment. Without the means to pay the hospital for such care, which the law requires hospitals to provide, the costs of treating the uninsured transfer to everyone else.
The voluntarily uninsured also drive up premiums by undermining “risk pools.” Insurance works by creating a large pool of money which each customer may draw on if hit by an expensive medical bill. Younger, healthy Americans typically pay more in premiums than they receive in benefits, but they receive security against unexpected illness, and they should keep this security as they age — so long as their premiums are paid.
If healthy Americans refuse coverage, however, the risk pools shrink until there is not enough money left to pay the bills. Insurers are forced to jack up premiums to meet the needs of their consumers.
That’s why health care reform — including the bill recently proposed by Senate Finance Chair Max Baucus — includes an “individual mandate,” a law requiring those who can afford insurance to purchase it. Indeed, before conservatives decided that kneejerk opposition to President Barack Obama is in their political interests, many supported such a law. The individual mandate is a cornerstone of the health reforms signed by former Massachusetts governor Mitt Romney.
Now some on the right even suggest that an individual mandate is unconstitutional, but this claim is baseless. Even ultra-conservative Justice Antonin Scalia acknowledges that Congress has sweeping authority to enact laws that regulate “economic activity,” and it is difficult to imagine a law with a more obvious economic impact than a requirement that all Americans be insured.
In health care, no one is an island, and the irresponsible choices of a few drive up costs for everyone. An individual mandate, however, will require personal responsibility from the uninsured, and help ensure affordable health care for everyone.
Ian Millhiser is a policy analyst with the Center for American Progress.
Compulsory insurance has consequences
Americans increasingly fear that health reform is something Congress is planning to do to them, not for them. Nowhere is this truer than with Washington’s plan to require every American to have health insurance or face a hefty new tax.
Liberals believe the federal requirement is necessary to achieve universal coverage. This is a worthy goal, but it sets up a cascade of big-government spending and intrusions that the American people are saying, as clearly as they can, they do not want.
For starters, imposing an “individual mandate” means the government must define what constitutes acceptable health insurance. All of the bills making their way through Congress would require a very expensive benefits package.
Hundreds of billions of dollars in new taxpayer subsidies would be needed to help Americans pay for this rich coverage.
Families that don’t buy insurance would face a new tax of up to $1,900 a year. People with expensive health insurance likely would be hit with a 40 percent premium increase as their insurance companies pass a new excise tax on to them.
Young people would face higher premiums to subsidize older Americans. And the government would tell everyone how much they can afford to pay for all of their health costs, up to $20,000 a year for those with incomes above $96,000, for example.
Further, employers would be required to provide health insurance and help their workers pay premiums, or face penalties. Many of them don’t believe the promised government subsidies for some small businesses would help and say the new burden would lead to less hiring and more layoffs.
The mandate also puts the federal government in the business of regulating health insurance, inevitably triggering price controls and leading to restrictions on access to care.
Only one in five Americans say their health insurance coverage and the quality of the care they receive will improve if a bill passes Congress this year. How right they are!
President Barack Obama argued against imposing a mandate for health insurance during the campaign, saying, “It’s not that people don’t want health insurance. It’s that they can’t afford it.”
He was right and should now focus not on the individual mandate, but on making health care and health insurance truly affordable. That is what the American people want.
If insurance were more affordable, millions more people would buy it, especially if Congress gives everyone the same tax break for buying coverage. That’s a simple solution that could expand insurance coverage without massive new government spending and bureaucracies.
Grace-Marie Turner is president of the Galen Institute, a non-profit research organization that focuses on market-based health reform ideas. www.galen.org