Depending on whose numbers you want to believe, somewhere between thirty and fifty million Americans don't have health insurance. The Democrats attempted to make this fact into a campaign issue, promising that the government, were it turned over to them, would somehow alleviate the situation; the Republicans were apologetic but invoked the usual mantra about not screwing with the marketplace.

Neither party, of course, is asking the right question. And as I sit here, looking at my auto-insurance policy, which the state demands that I buy — in fact, they recently demanded I buy twice as much of it — and my homeowner's insurance policy, which the bank demands that I buy, and I come up with a question of my own: if these policies are mandatory, why aren't health policies mandatory?

Ted Halstead, head of the New America Foundation, a liberal think tank in Washington, is asking the same question. Their answer: "universal coverage in exchange for universal responsibility," a system whereby obtaining health insurance will be mandated by law, to be paid for by the consumer of health services and to be subsidized by the government when necessary. Halstead explained how it would work in an op-ed in The New York Times in 2003:

Of the 41 million Americans without health insurance, a full two-thirds are below the age of 35. Mandating tens of millions of young and relatively healthy Americans to join the insurance risk pool would drive down the costs for everyone. Insured patients are also less likely to rely on expensive hospital emergency rooms for their basic medical care.

The dominant distribution channel for health insurance today is as an employer-sponsored benefit. How would this change under a mandatory system? Halstead answers:

The new system would also be an improvement for Americans who receive health insurance from their employers. They would be able to select their own insurance policy and level of coverage from among private providers, instead of being limited to the one selected by their employer. They would also be able to keep the policy and doctors of their choice as they move from job to job. Employers, meanwhile, would not stop paying for coverage — they would simply contribute to the policy of their employee's choosing. After all, employer-subsidized health insurance is voluntary now, and there is little reason to believe that employers would suddenly stop providing it.

Since the employer contribution tends to be uniform for employees within a given group, you could opt for a more elaborate policy and pay the extra premium yourself, or you could buy something comparatively minimal — especially if you're "young and relatively healthy" — and pocket the difference.

And how would this affect existing government programs?

America would no longer need to maintain a separate Medicaid system for the very poor. Insurers would have to accept all comers and be prevented from discriminating on the basis of pre-existing conditions. Ensuring that all citizens self-insure need not be difficult; those unable to prove that they had done so on their annual tax form could be enrolled in a default private plan by the government, and either billed or subsidized accordingly.

How would the numbers work out? A sample from health-care economist Mark V. Pauly at the University of Pennsylvania's Wharton School:

Let's say you cap the deductible at $4,000 and set a limit that out-of-pocket health care costs can't exceed 10 percent of an individual's or family's income. That would mean that a family earning $30,000 per year would receive $1,000 in a health voucher.

Following this example, they'd pay only $3,000 of that year's expenses, and the government will pick up the remaining $1,000. Similarly, a family struggling to survive on $16,000, faced with a $4,000 bill, would receive a $2,400 subsidy.

Of course, it will probably be necessary for the government to assist with paying the premiums for these policies, but since they are intended to cover "catastrophic" expenses, as opposed to comparatively minor items like prescriptions, the premiums will be lower than most present-day policies in the first place.

Conventional wisdom holds that group policies are less expensive than individual policies, and surely it is true in some instances. But the experience of my particular workplace has been pretty consistent: the carrier lowballs the rate to get the contract in Year One, then announces an upward adjustment for Year Two, prompting The Powers That Be to look for a new carrier, who lowballs the rate to get the contract, and so on. I rather suspect this sort of manipulation will be less blatant if emphasis shifts away from group policies and employees can go anywhere they want for insurance.

I'm sure there's a downside to this somewhere, if only because something in the word "mandatory" sounds awfully coercive. Still, hardly anyone balks at other "mandatory" insurance, and I have to admit, New America's insistence on "universal responsibility" strikes me as far more responsible than anything that exists in the non-system we have today.

The Vent

  7 November 2004

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 Copyright © 2004 by Charles G. Hill