Would a Health Insurance Mandate Help?
By Randall Holcombe • Thursday December 17, 2009 1:54 PM PDT • 12 Comments
One of the issues health care reform is grappling with is how to extend health insurance coverage to the uninsured. At first glance, it would appear that one way to make sure everyone has health insurance is to mandate that everyone has to buy it. This article indicates that about 16.2% of Americans are currently uninsured. But (I’m not the first one to point this out) every state requires drivers to have auto insurance, yet this article says that nationwide, 14.6% of drivers are uninsured.
There’s not much difference in the percentage of uninsured motorists and those who don’t have health insurance. The comparison is slightly unfair, because all uninsured motorists can afford a car, or at least afford access to one, whereas the health statistic includes everyone, regardless of whether they can afford a car or anything else. Is there any reason to think that a health insurance mandate would be any more successful than an auto insurance mandate at getting people to buy insurance?
I am curious, though, as to how violators would be identified, and how they would be penalized for their violation. A fine would be levied against the uninsured, but it’s hard to see how one would be identified as uninsured unless the person needed health care and couldn’t produce proof of insurance to the doctor or hospital. Do we bill the person for hospital and physician services, and on top of that levy the fine? Would health care providers have the responsibility for turning in violators?
Some uninsured individuals are eligible for programs like Medicaid, but don’t enroll. When they end up in the hospital, the hospital sees that they enroll, because then the hospital can get paid. But someone like this would still be in violation of the mandate, so presumably would be subject to the fine even if Medicaid paid for the health care. If the person didn’t pay the fine, would he or she then be jailed?
Consider a scenario: Joe gets laid off and loses his employer-provided health insurance. So, Joe looks for another job, and has a number of promising leads. He’s thinking he should have another job in a month or so, because he’s got good prospects. But before one pans out, he’s in an auto accident on the way to a job interview and ends up in the hospital. Does Joe deserve a fine because he didn’t line up health insurance before he went looking for another job?
Let’s face it: Many of the 16% of Americans without health insurance aren’t in the best of financial circumstances, and when one thinks about the mechanics of identifying them and fining them for being uninsured, it just doesn’t seem feasible. The government might find a few relatively well-to-do uninsured and fine them to make an example of them, but for most uninsured, it’s implausible to think that they actually will have to pay a fine.
The percentages I cited at the beginning make it appear that a mandate would have little effect on the actual share of Americans who have health insurance. But when you think about how the mandate might actually be enforced, it appears unworkable. In that respect, it’s not that different from other aspects of the current reform proposals.
Tags: Healthcare, Insurance, Personal Liberty 
I believe the mandate will be fairly effective. It will probably be enforced through the IRS. All taxpayers will have to prove they have health insurance. This includes illegal aliens and others who, according to the administration, will not get the benefit of subsidies. Since one of the big purposes of the mandate is to ensure a captive market of customers for the insurance industry, I imagine the mandate will be better enforced than the auto insurance mandates. I see the individual health mandate as, by far, the most horrifying and authoritarian part of Obamacare.
Anthony Gregory | Dec 17, 2009 | Reply
Furthermore, the penalty for not buying the mandate is up to, I believe, five years in prison. Poor and young healthy Americans will find a way to pay for the mandated insurance, just as they find a way to pay their taxes every year.
Anthony Gregory | Dec 17, 2009 | Reply
A mandate would destroy the health program I use, Samaritan Ministries, and similar organizations. These are membership groups that pay each others’ medical expenses. It is not insurance, but rather sharing, which spreads out expenses and provides coverage for less than insurance rates.
Lane Lester | Dec 17, 2009 | Reply
Anthony: Even if the mandate is enforced through the IRS, many people don’t file taxes. Some are exempt because they don’t earn enough to be required to file. Some don’t file even if they are legally required to. The mandate enforcement will be one more thing that will cause people to avoid the IRS.
Kristin Sampayan | Dec 17, 2009 | Reply
Kristin, it will be one more reason to avoid the IRS, but also another reason for the IRS to come down hard on people. It would seem to me even easier to ensure someone is buying approved health insurance than it is to ensure they are paying the “right” amount of taxes.
Anthony Gregory | Dec 18, 2009 | Reply
How would this work, Anthony? Would people file their policy numbers with their tax returns? Presumably they would then be checked against a database provided by insurers.
What about people who cancel their policies after they get their refunds, or never pay their premiums? What about people who change jobs and with it insurers? It seems to me that if the IRS were trying to audit people for insurance coverage, most of the people whose coverage couldn’t be verified would actually have coverage (changed jobs, changed insurance companies, etc.). One reason is, only 16% of people aren’t covered. And as Kristen points out, lots of people without coverage don’t file tax returns, so most of the people without coverage wouldn’t be identified by the IRS.
It seems to me the auditing demands would be too great to make this work. But then, maybe I’m too pessimistic!
Randall Holcombe | Dec 18, 2009 | Reply
From my point of view, I think if you believe this won’t work, you’re being too optimistic, not pessimistic. Why on earth would we want it to work?
Anthony Gregory | Dec 18, 2009 | Reply
I, personally, don’t want it to work. I also don’t see how it can. Perhaps I was referring to myself as a pessimist in an unconscious attempt to imitate one of my heroes, Bob Higgs.
Randall Holcombe | Dec 18, 2009 | Reply
Not to sure where the USA insurance companies stand on disputing a genuine claim on the grounds of not disclosing information whether it is relevant or not like the UK insurance companies do and the sad thing is for many policy holders is that they are entitled to do so in the law that stands at the moment. Some of the UK laws go back to 1906 and have never been amended to stay up to date with the current times on this massive industry.
insurance | Dec 20, 2009 | Reply
I can’t speak for any other of the 16%, I can only speak for myself (although I know of several like me), but can I really be a minority who is capable of doing basic math? Has no one stopped to ponder the fact that insurance companies sell insurance because there is money to be made in selling it? And if one can understand this simple precept, then is it difficult to understand the concept that I choose to be uninsured because I profit from that decision? I save money in 2 ways; first the tens of thousands per year that I do not mail to an insurance company earns interest in my account which I can spend on health care, and the second is in the less discussed fact that many doctors would rather give a discount than pay the costs necessary to bill insurance companies. I pay on average 30-40% less on my doctor bills than the insurance companies pay for my neighbor’s medical bills (anyone still wonder what happened to medical costs in this country?).
I wonder why this is never discussed when the empty-headed politicians tell us that so many people are without insurance and need to be insured (because medical costs are so expensive).
Why my dear fellows is no one discussing these facts? Of course this question will fall in the same bin as the question; “why are we discussing doing something that the Constitution says that they cannot do unless they first amend said Constitution?”... but having sat in the bottom of the can for many years, once the dollar goes to zero, perhaps we can discuss returning the free market that once made this nation great.
Odd that I type this as I listen to the “We hold these truths” the radio program from 1941, which discussed the Bill of Rights.
joe4liberty | Dec 24, 2009 | Reply
It will be one more reason to avoid the IRS, but also another reason why the IRS is tough for people. Young and healthy Americans to find a way to pay for compulsory insurance, and to find a way to pay your taxes each year.
eye lift guide | Feb 12, 2011 | Reply
I think the mandate is very effective. It is expected to monitor the IRS. I imagine that the order has been better implemented mandates for auto insurance.
body lift guide | Feb 15, 2011 | Reply