insights (2007-14)

A Mandate for Universal Health Care?

If you drive a car, in nearly every state, you're required to have automobile insurance. If you want to get a mortgage on your house, you're required to have homeowner's insurance.

Arguably, people without health insurance are a menace both to themselves and to society.

Half of the individual bankruptcies in this country purportedly result from an inability to pay medical bills. Requirements that emergency rooms treat all comers regardless of their ability to pay raise the cost of health care for everyone who is insured in one way or another.

So why shouldn't everyone be required to have health insurance, assuming it can be made affordable for lower income folks?

This is a question that's coming to the fore at both the state and national level as one way of extending coverage to the estimated 46 million Americans who are presently uninsured. In the political arena, universal health care in one form or another has mainly been a rallying cry for liberals. And all of the leading contenders for the Democratic presidential nomination in 2008 have placed it high on their agenda, though only one--former Sen. John Edwards--has gotten specific about how he would achieve it. But at the state level the push for making health insurance mandatory is being led by two Republican governors with support from some conservative think tanks such as the Heritage Foundation.

In Massachusetts, then governor (and now presidential candidate) Mitt Romney presided over the adoption of a plan that requires every citizen of that state to obtain health insurance by July 1 or become subject to penalties. In California, Gov. Arnold Schwarzenegger is now leading the charge for a similar plan after having   vetoed a different version that the state legislature approved last year.

Needless to say, these individual mandate plans, as they are known, are complex and costly in their provision for subsidizing coverage on a sliding scale for people with incomes up to 300 percent of the federal poverty line (FPL) (about $30,000 for an individual). But it's worth looking further into them as a harbinger of what may follow in other states or nationally. Indeed, an individual mandate is a centerpiece of John Edwards' comprehensive proposal. Contrary to the widespread supposition that equates universal health care with "socialized medicine," these plans differ from the Medicare-like national health insurance plans in place in virtually every other industrialized nation in the world.

Both the Massachusetts and California plans would build on employer health insurance but with a stick that would subject employers with more than 10 workers to state assessments if they don't offer and help pay for coverage. In Massachusetts, uninsured individuals with incomes below 300 percent of FPL would have a choice of seven state-approved private health plans. In California, they would have to get their subsidized coverage from a state board that administers other state health plans.

In both cases, the subsidies address one of the two biggest reasons why people are uninsured: namely, unaffordability. The individual mandate also addresses the other: namely, the unwillingness of many healthy young adults to pay for insurance they don't believe they need. Requiring these low-risk individuals to get coverage can help bring down the cost of health insurance for everyone and the amount of subsidization needed to support coverage for the needy.

Most of the cost of the Massachusetts plan is expected to be covered by some $500 million in federally matched funds that have been going to reimburse hospitals for much of the cost of unreimbursed care. Once everyone has insurance to pay for their care, these payments will supposedly no longer be needed. In California, covering some six million uninsured adults represents a much bigger challenge, and Schwarzenegger has proposed assessing hospitals four percent of their revenues and doctors two percent of theirs to help pay for it. (These assessments would be partly offset by stepped-up payments to health-care providers under the state's Medicaid plan.)

For all their benefits, individual mandate plans raise a host of questions. For one, if the government starts requiring people to buy a product where may such requirements stop? For another, what constitutes acceptable health insurance? (Massachusetts has been wrestling with this in arriving at definitions of what constitutes "minimally credible coverage.") In addition, there's the question of how the mandates will be enforced. State departments of revenue will be expected to verify coverage (or assess penalties for lack of same) in connection with state income tax filings, but the prospect of creating big bureaucracies to do this is not an inviting one.

Since Tennessee doesn't have an income tax, that construct won't work here. And Mitt Romney may be right when he says, "I don't think we're ready as a nation to adopt a Massachusetts plan for the entire nation."

However, if you believe, as I do, that some form of universal health care is long overdue in this country, the individual mandate approach seems preferable to the most widely advocated alternative, which is letting the federal government control everyone's health benefits under a "single payer" system. But either of these approaches beats the Bush administration's plans for making health insurance more affordable through tax deductions that would only benefit those who have enough income to take advantage of the deductions.