Mandatory Insurance Is Wrong Fix for Health Care: Ramesh PonnuruRamesh Ponnuru
Nov. 22 (Bloomberg) -- In the most important Supreme Court case of his term in office, President Barack Obama will be defending a policy that he opposed as a candidate.
During the 2008 Democratic primaries, one of the few differences he had with rival Hillary Clinton was that her health-care plan featured an individual mandate to purchase health insurance, while Obama rejected a mandate on principle. But the health-care law he eventually signed included a mandate, and the court has now agreed to rule on whether that is constitutional.
Obama’s position during the primaries accorded with the elementary principle that there should be a strong presumption against ordering people to do something. Even people who, like Obama, now believe that a mandate is necessary can agree with this principle. A presumption, even a strong one, can, of course, be overcome for good reasons. In the case of the individual mandate, those reasons don’t exist. Obama was right the first time.
While most proponents of an individual mandate are Democrats, some Republicans have also advocated it, notably former Massachusetts Governor Mitt Romney, who believes that it is the right policy for state governments to adopt although he opposes the federal mandate.
The principal arguments for the mandate are three. The first is that the uninsured raise the premiums of everyone who has insurance. Obama made this point in his address on health care to a joint session of Congress in September 2009: “Those of us with health insurance are also paying a hidden and growing tax for those without it -- about $1,000 per year that pays for somebody else’s emergency room and charitable care.”
When Obama spoke, this figure had already been debunked by the Kaiser Family Foundation, which reached an estimate closer to $200 per year for a family. The Congressional Budget Office reached a similar estimate.
So the cost the mandate is meant to address is smaller than Obama assumed. It could be driven still lower by means less intrusive than a mandate. State regulations drive up the cost of insurance by requiring that it cover services that not everyone wants. If young, healthy people were allowed to purchase cheaper insurance policies to cover the costs of catastrophic health problems, many of them would surely do so, and they would then pose less risk of generating costs for others.
If a mandate forces these people to buy insurance policies they don’t want -- because the expense of the policies is out of proportion to their probable need for it -- then it isn’t a way to avoid cost-shifting. It’s a form of it.
The mandate itself carries significant costs. If the government requires everyone to purchase insurance, it has to define what form of insurance meets the requirement. Medical provider groups have an incentive to lobby the government to make sure their service is required under the mandate. To the extent that they succeed, the cost of insurance goes up. (That’s how those state regulations arose.) And, of course, people who cannot afford to comply with the mandate must receive subsidies: another cost. And then there is the cost of enforcement. So much for the cost-shifting argument.
The second justification proffered for a mandate is that people who can do so have a moral obligation to provide for their own and their families’ health care so as not to become the responsibility of others. This is true. But there are many similar moral obligations that we don’t use the law to enforce. If you impoverish yourself through heavy drinking, you may well end up on public assistance of some form or another, but we don’t use intrusive means to stop you from making these choices.
Compassion moves us to cover the emergency-care costs of those who can’t pay their own way: A federal law, which the vast majority of Americans support, forbids hospitals from turning patients away. But we aren’t morally entitled to insist that our compassion be cost-free, or that the potential objects of our compassion take action to minimize the costs that compassion might move us to bear.
The third justification for a mandate is that it is necessary to prevent the regulatory scheme of the Democrats’ health-care law from unraveling. The new law prohibits insurance companies from discriminating against people on the basis of pre-existing health conditions. They will no longer be able to charge higher prices to sick people. Under this policy, nobody would have any reason to purchase health insurance until they got ill. This would obviously be an unsustainable arrangement. Premiums would rise and rise, and fewer and fewer people would buy insurance. The point of the mandate, then, is to prevent this death spiral.
In other words: The new health-care law first makes health insurance a product no one would voluntarily buy and then makes its purchase compulsory.
There are better ways to solve the problem of people who have trouble obtaining insurance because of pre-existing conditions. That problem is largely a byproduct of federal health-care policies that have encouraged reliance on employer-provided health insurance, even though few people stay with one company for their entire working lives. If we allowed a robust market in individually purchased health insurance to develop, it would be much easier for people to buy policies that could be renewed even when their health status changed.
The health-care law now under challenge in court attempts to address the problem of people with pre-existing conditions by providing them with subsidies that it hides in a maze of regulations, including the individual mandate. It would be more transparent, and less coercive, to provide on-budget subsidies to those who might need help during the transition to an individual market, or to the much smaller population who might need it after the transition.
The Supreme Court has a lot to ponder as it weighs the constitutional merits of the case before it. One thing neither the justices nor the public need worry about is that American health care needs an individual mandate to work.
(Ramesh Ponnuru is a Bloomberg View columnist and a senior editor at National Review. The opinions expressed are his own.)
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