John Goodman’s “Do we need a mandate?” article got star billing in this week’s Health Wonk Review, and it’s definitely a thought-provoking article. Dr. Goodman argues that we do not need a mandate requiring everyone to have health insurance. Even those of us who do believe that the mandate is a good idea can benefit from looking at other possibilities, since it’s hard to ignore the unpopularity of the individual mandate provision in the PPACA.
Dr. Goodman uses life insurance as an example of how ridiculous the individual mandate would be if applied to other types of coverage. He notes that it wouldn’t make sense to force insurers to offer community-rated life insurance policies to every applicant, regardless of health, and that it would also seem silly to require everyone to purchase life insurance. This is a valid point, but I don’t think we can really compare the two types of coverage. For starters, not everyone has a need for life insurance. In general, life insurance is not necessary for people without financial dependents. But very few people (except the ultra-wealthy who can realistically self-insure) can truly say that they have no need for health insurance. It’s impossible for any of us to know with certainty that we’ll never be stricken with a serious illness or injury that presents two options: expensive medical care, or death. My own family has experience with this, as my father developed a very rare (and very serious) auto-immune disease at the age of 54, after having been so healthy that he had never taken a single sick day in his entire career.
There’s another fundamental difference between health insurance and life insurance. If a person who has financial dependents dies without life insurance, the family is mostly out of luck. If they are left truly destitute, they will likely qualify for public assistance programs, but there’s nothing to keep them from losing their home, having to search for additional jobs, etc. However, if a person without health insurance suffers a heart attack and help is summoned, he will be taken to an emergency room and stabilized if possible. Here in Colorado, at Denver Health Medical Center, the cost of treating uninsured patients is hundreds of millions of dollars a year. It’s true that people without health insurance do not have access to the same level of health care as those with health insurance, but hospitals cannot turn away uninsured patients in emergency situations, regardless of their ability to pay. There is no such protection against a mortgage company that is moving to foreclose on the house of a family whose breadwinner died without life insurance.
Instead of a mandate, Dr. Goodman is in favor of a refundable tax credit ($3000 for individuals, and $7500 for families). In the current individual market, those amounts will cover a pretty good amount of coverage (our family of three pays $4800/year for a high deductible HSA qualified policy). He notes that for people who choose not to purchase health insurance, the money could instead be put into a “a fund to pay for uncompensated health care — should the need arise.” This makes sense on the surface, but one has to wonder what would happen to health insurance premiums over time for people who do choose to purchase coverage under this sort of system. Since coverage would still be guaranteed issue (at least part of the time, depending on whether limited enrollment windows are enacted), it’s likely that most people with health problems would be in the insured pool, and most people who opted to go without health insurance would be relatively healthy. As time goes by, some of those healthy people would have injuries or illnesses that required care (presumably paid for out of the fund Dr. Goodman described), but the people in the health insurance pool would tend to be more likely to need care, since that group would include people who were sick from the start. By keeping the two groups separate, rather than integrating everyone into the health insurance system, it seems that we would be inviting adverse selection in the health insurance system, and the result would likely be premiums that would increase even faster than they do now.
There is no simple solution to the issue of balancing guaranteed issue health insurance, an individual mandate, and personal liberties. It will be interesting to see what 2011 brings in terms of court battles over the constitutionality of the individual mandate, and whether any other options become viable alternatives.