Consumer Power Report: To Mandate, Or Not to Mandate

Published August 1, 2007

Debate is underway within politically conservative circles between those who think people should be forced to buy health insurance coverage and those who think freedom includes the liberty to go without health insurance.

The latest example is a point-counterpoint between Merrill Matthews, executive director of the Council for Affordable Health Insurance (CAHI), and The Heritage Foundation’s Bob Moffit.

I know and respect both gentlemen, so it distresses me that the old “divide and conquer” strategy is working so well.

Long-Standing Dispute

This debate is part of a long-standing dispute between Heritage and the rest of the free-market community.

In September 1992, when I was running CAHI, I wrote to Stuart Butler, Heritage’s vice president of domestic and economic affairs, objecting to a Heritage paper supporting individual mandates created under the guise of “consumer choice.” In July 1993, Cato Institute President Ed Crane wrote a similar letter to Butler, and in June 1994 National Center for Policy Analysis (NCPA) President John Goodman wrote to Heritage President Ed Feulner objecting to Butler’s support of community rating and guaranteed issue, state mandates that raise the cost of insurance and thus increase the number of uninsured.

More recently, Butler served on the events committee of the National Academy of Social Insurance, an organization that encourages and celebrates the growth of government programs such as Social Security, Medicare, and Medicaid.

Tax Reform Consensus

During the 1990s, CAHI, Heritage, Cato, and NCPA came together under the auspices of the Consensus Group, organized by Galen Institute President Grace-Marie Turner, to identify and work on the issues that united them.

The tax treatment of health insurance was the one issue all agreed on–specifically, supplementing the tax exclusion of employer-sponsored health insurance with a tax credit for individually purchased coverage. This has been a hallmark of the Bush administration’s health agenda as well, but it went nowhere in a Republican Congress and has even less chance now that Democrats are in control.

So, The Heritage Foundation is back to supporting mandatory coverage along with a Massachusetts-style “connector” that extends favorable tax treatment to individually owned coverage, but only for a limited number of state-approved policies. Heritage is actively encouraging such programs in state legislatures nationwide.

Too Much Government

Heritage attempts to address the concerns of its free-market colleagues by proposing an “opt-out” provision: If someone is willing to put up a $10,000 bond, he or she should be allowed to opt out of the insurance mandate. It is a matter of “personal responsibility,” according to Heritage.

This argument has many problems. Because the opt-out provision is unlikely to be adopted anywhere, it amounts to rhetorical window dressing. Second, people are already “personally responsible” for paying the bills they incur. We don’t need a new law for that.

More importantly, it completely misses the reality that states have made a hash of the insurance market with excessive regulation and mandates. Coverage would be far more affordable if states simply repealed the misguided regulations they have enacted over the past 20 years.

People don’t buy coverage today because the available coverage offers poor value for the premium price. Their refusal to purchase should be seen as an important signal to legislators and the insurance industry that they have gone off-track. Forcing people to buy something they don’t want solves nothing.

Mandating insurance coverage ignores the fact that it is precisely third-party payment (both public and private) that has created almost all of the problems in health care. We need to reduce the role of third-party payers, not increase it by mandating everyone be covered by third-party payers for virtually everything.

Greg Scandlen ([email protected]) is president of Consumers for Health Care Choices, a consumer advocacy group based in Hagerstown, Maryland.

For more information …

“Should States Require Residents to Buy Health Care Insurance? Yes: It’s everyone’s responsibility,” by Robert E. Moffit, San Diego Union-Tribune, June 15, 2007,

“Should States Require Residents to Buy Health Care Insurance? No: Look at failures in Massachusetts,” by Merrill Matthews, San Diego Union Tribune, June 15, 2007,