Auto Insurance is Mandatory, Why isn’t Health Insurance?

Lindsey Mattila (CMC ’17)

In my last blog post, Reducing Healthcare Costs Through Pharmaceutical Policy, I analyzed the pharmaceutical industry and explained why it is the most promising healthcare sector to improve in order to decrease rising health care costs. To put a stop to rising costs, which are predicted to rise even more dramatically with the aging Baby Boomers, more will need to be done. Another tool that could be implemented to reduce costs must be evaluated: the individual mandate. The individual mandate requires that citizens either purchase insurance or pay a penalty. This mandate became controversial when it was enacted as part of the Affordable Care Act, leading the Supreme Court to hear a case on the mandate four years ago. The Court ruled that the mandate is legal under the tax powers of Congress. Even with their ruling, the mandate continues to be highly controversial. Many opponents argue that it is not legal for the to require citizens to purchase any product- even with the Commerce Clause which gives Congress the right to regulate economies between states. The debate over the mandate has become particularly intense with the introduction of the American Health Care Act which may not include the mandate.

The theory behind the health care mandate is to incentivize people to be accountable for their own health and financial liabilities. Specifically for younger, healthier people, who have the highest uninsured rates, this encourages them to join the insured pool. While there is not much legal precedent for mandates, the closest example is auto insurance. To mitigate the financial risk of driving, the government requires citizens to purchase insurance to cover their own personal liability. This is done in order to protect all other drivers from having to pay for an accident that is not their fault. The only caveat to this mandate is that citizens can opt out of insurance if they can prove that they are financially capable of covering potential accident costs.

This logic has been applied to health care mandates.  Even the youngest, healthiest, or the luckiest patient requires medical care at some point in their lives. So, proponents of the mandate reason that we should be responsible for our health liability as well. Conservatives assert that this argument is not fair since driving is not necessary. In contrast to health care, it is a personal choice and a luxury, not a right. Additionally, they argue that a trip to the emergency room is not the same liability as causing damage to someone else’s car. When you cause damage to someone else’s car, the effect on another individual is direct and tangible. On the other hand, others argue that if you are not insured, require care, and cannot afford it, it is, in fact, a liability to everyone else, since the care will be financially covered by taxpayer dollars. One study found that the cost of care for uninsured patients was $42.7 billion annually, which caused employers and insured families to pay an extra $1,000 in premiums.

Legal and political issues aside, for a government-run health insurance scheme to be successful, many experts agree that a mandate is becoming largely necessary. One of the reasons health insurance is becoming increasingly unaffordable is due to rising deductibles and monthly premiums. These costs rose with the implementation of the ACA and its provision granting insurance to those who have pre-existing conditions. The issue with this is that many people with existing illnesses and conditions who did not previously have insurance flocked to sign up for insurance. Those who did not have an existing condition and did not have insurance (think healthy 20 somethings), however, still chose to abstain from buying into insurance.

For insurance, there needs to be a healthy balance of people not actively using their insurance for it to function. In other words, healthy people who buy insurance as a preventative method balance out the costs of those who actively need financial assistance in covering high medical costs. With the weak mandate in the ACA, those who chose not to buy insurance were forced to pay a penalty fee. That fee, however, was not enough to offset the additional costs of insuring people with pre-existing conditions, which caused insurers to lose millions and offset the additional risk by increasing monthly premiums and deductibles.

Health care costs are a huge and rising problem for the federal budget, but these costs wreak even worse havoc on personal budgets– even for those who are insured. Three in five bankruptcies are due to health care costs. Making insurance affordable for everyone will require making the insurance pool better balanced. This could be accomplished with a mandate because it increases the enrollment of young healthy people. The current administration has made health care reform a priority, and if their proposals are passed, a determinant of their success may be a mandate. Though the new American Health Care Act does not explicitly include the term “individual mandate” in order to appease more conservative legislators, the Act still enforces some form of a mandate through the flat penalty fee for being uninsured. As controversial and politically unsafe as the mandate may be, a stronger one will be necessary to move health care costs in the right direction.

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