Mandatory Health Insurance Fails in Theory and in Massachusetts

Published February 1, 2009

America’s Health Insurance Plans (AHIP), a trade group representing more than 1,000 insurance providers, has come out in favor of a law requiring everyone to buy what they sell. A friend points out this is like the Big Three automakers supporting a law requiring everyone to buy a new, American-branded car.

This may be the wave of the future. Levi-Strauss could work on a law requiring everyone to buy blue jeans, Jif and Skippy could get Congress to require everyone to buy peanut butter, and Steve Jobs and Bill Gates could have lawmakers require everybody to buy a new computer every year.

This is a whole new way to market your product. If people don’t want to buy what you sell, get a law passed making them do it anyway.

Imagine the money we could save on research and development and on marketing. After all, consumers don’t know what’s good for them, so we should have Washington decide for them (for their own good, of course).

Many Aren’t Ready

Of course, the members of the intelligentsia running editorial departments across the country think this is just swell. The Philadelphia Inquirer ran an editorial headlined “Insure Everyone.” It didn’t indicate it was really sure why we should mandate this, other than, “insurance works best when everyone is in the pool.”

Does it really, though? I wouldn’t bet on that being accurate.

The fact is, there are many people who cannot manage insurance, even when it is “free.” They may be too illiterate to read and understand an insurance contract, they may be mentally or emotionally disadvantaged, they may be in this country illegally or criminals who do not want to identify themselves to authorities, or they may be addicts incapable of impulse control or functional behavior.

Unfortunately, that describes a rather sizeable segment of the American population. They do not need an insurance card, and they will not be able to handle one. What they need is direct access to care through neighborhood clinics and charitable hospitals.

Mass Failure

The mandate approach isn’t going so well in Massachusetts, which remains the highest-profile state to implement an individual insurance mandate. In fact, if the demands for “evidence-based medicine” were applied equally to public policy, policymakers would run away from the idea of mandatory coverage as fast as possible.

“Republican governor (and former presidential candidate) Mitt Romney proclaimed that ‘every uninsured citizen in Massachusetts will soon have affordable health insurance,’ that costs would be reduced through ‘market reforms’ encouraging ‘personal responsibility,’ and that the plan would require ‘no new taxes … and no government takeover,'” wrote Dr. Paul Hsieh, president of the Foundation for Individual Rights in Medicine, in the Fall 2008 issue of the Objective Standard.

However, “two years after its inception, the Massachusetts plan has failed to achieve either of its goals. Instead,” wrote Hsieh, “the plan has increased costs for individuals and the state, reduced revenues for doctors and hospitals, and left Massachusetts officials in the awkward position of having to admit that their ‘universal coverage is not likely to be universal any time soon.'”

Coverage Without Care

State costs have gone up so much that Massachusetts has decided to cut payments to physicians and hospitals, which has reduced access to medical services instead of improving it as promised.

The state is facing a shortage of doctors while being swamped with new patients forced to wait two to three months for appointments. In other words, Bay Staters may have health insurance coverage, but they don’t have health care.

Even the poor (who have been aided under other programs) are being hurt. The Cambridge Health Alliance, which has long provided care to the indigent, is cutting staff, reducing services, and limiting referrals to specialists in an effort to stay solvent in the face of rising costs and reduced payments.

Skyrocketing Costs

In addition to all these problems, costs are skyrocketing because of special-interest pleading the politicians crafting Massachusetts’s mandate found simply irresistible. Thus the program is now costing Bay State taxpayers $400 million more than originally advertised, 85 percent more than the promised cost.

The state is planning to mandate an increase of 10 to 12 percent in insurance premiums in 2009 (twice the national average) while cutting payments to physicians and hospitals by 3 to 5 percent. That will reduce access to care even more.

Mandatory insurance violates insurers’ and consumers’ right to act in their own best interests by forcing insurers to sell and customers to purchase insurance on terms and prices dictated by government decree. This destroys the very conditions that give insurance any value at all.

Greg Scandlen ([email protected]) is director of Consumers for Health Care Choices at The Heartland Institute.

For more information …

“Mandatory Health Insurance: Wrong for Massachusetts, Wrong for America,” Paul Hsieh: