Mandates

Various pundits and Democratic candidates for President have been arguing about ways of bringing health insurance to those who currently lack it. One idea is health insurance mandates—require people to buy health insurance, and subsidize the cost for those who have trouble affording it.

Greg Mankiw today says what I’ve been thinking about this: “a mandate is only as effective as the penalty backing it up.” Auto insurance mandates have not solved the problem of uninsured motorists, and there are penalties for driving without auto insurance and checkpoints for auto insurance coverage (e.g., state motor vehicle inspections) that have no obvious analogy with health insurance.

Imposing penalties for lack of coverage, moreover, would have perverse effects. People who are likely to be fined for seeking medical care without insurance will either try to apply for insurance coverage after they get sick and realize they need medical care or try to avoid seeking care altogether. Now, uninsured people seek care in emergency rooms of public hospitals—an inefficient way of providing them care, to be sure—but, in a system with significant mandates and penalties, they are likely to avoid seeking care altogether. Moreover, if they can’t afford insurance, they probably can’t afford penalties. What then?

There are, no doubt, many people who could afford health insurance but do not have it simply because they are young, healthy, and willing to take the risk that they will not face significant health care costs in the near future. Mandates would incline some of them to buy insurance. But it’s not clear that this effect would be strong enough to outweigh the negatives.

2 thoughts on “Mandates

  1. When it comes to health insurance, the plan that would hurt our economy the least is Hillary Clinton’s plan. Everyone would have health insurance. WA, NJ, NY and a few other states who have already tried Obama’s proposed health insurance plan of not mandating coverage. These states have driven out of the better insurance companies. When anybody can get health insurance without having to go through medical underwriting, people won’t get coverage until they absolutely need it. Usually because of a serious illness. This causes health premiums to sky-rocket. That’s because insurance companies are only paying claims for unhealthy people. The plans in these states tend to not be that great either. If everyone has health benefits, the premiums would be less because healthly people would factor in on determining the premium.

  2. Health insurance and auto insurance are analogous only if the unhealthy are charged a progressively higher rate for the costs they add to the system and the healthy/young/responsible are given discounts, just as negligent drivers are charged more for their added risk.

    However, the health insurance mandates operate in a completely opposite fashion: the healthy and responsible are punished in order to 1) add $50 BILLION annually to insurance co. revenues 2) pay down the exorbitant costs of a suicidally unhealthy nation 3) perpetuate the status quo of a broken system rather than fundamentally changing it. I have no idea where democrat’s derive these appeals to “fair play” in the health care debate, when their own bill drives a stake right through the heart of the concept: personal responsibility.

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