Mandatory health insurance? No sale
Is it the right of the government to impose an obligation to buy a private product that costs $12,000 a year for a family of four?
Gov. Arnold Schwarzenegger and Assembly Speaker Fabian Nuñez claim they are close to a deal on healthcare reform that will require every Californian to prove they have a private health insurance policy -- but does not cap how much insurers can charge for it. Hillary Clinton’s health plan, released last week, would require all Americans to have health insurance, also with no cap on premiums.
The goal of universal healthcare plans, including the one Clinton designed while first lady, has been to rein in waste and profiteering, then redistribute the savings to the public in the form of guaranteed healthcare. But these new “post-partisan” plans have been stripped of all effective cost containment. They simply force businesses, individuals and taxpayers to pick up the tab. Apparently, if you can’t beat the medical-insurance complex, join it. If it passes, the new system could be in place next year.
Under the proposed California compromise, employers will have to pay a share, but the ultimate responsibility lies with the individual. Policies for the poor would be subsidized, but taxpayers surely would be overcharged to boost corporate profits: Insurance premiums have increased 78% since 2001, compared with a 17% increase in inflation.
Health insurance is so unaffordable today precisely because no one is watching costs. With regulation of all medical charges, insurance would be cheaper and people might want to buy it. But Sacramento politicians already refused to standardize what doctors, hospitals, drug companies and insurers charge.
Californians are ready for market reforms to make health insurance more available and affordable, including forcing insurers to price policies fairly and preventing them from denying coverage to less healthy patients. Sacramento legislators should make the system fairer, regulate healthcare costs, then expand subsidies for low-income families. They should fix the broken market, not foist it on the public.
Mandatory purchase is nothing but a sop to top health insurers, which have given more than $4 million in campaign contributions to Sacramento politicians since 2001. Health insurers have had a hard time selling their increasingly expensive and less generous policies. So their plan is to make the government the big stick to force more customers into this market.
There is a big difference between mandatory participation in a cost-effective government program that protects us all (like Medicare) and being forced to buy an unregulated private product. This proposed mandate may get us closer to universal insurance coverage, but we’ll still be far from achieving universal healthcare. Why? Because the requirement will likely be for “affordable,” bare-bones policies -- the kind that come with $5,000 deductibles, big co-pays and holes in coverage and benefits.
Research shows that high-deductible policies discourage patients of moderate incomes from seeking preventive treatment. So low- and middle-income patients likely will wind up with coverage they won’t or cannot use until they are very sick, the point at which their illnesses are the most expensive to treat.
Forcing citizens to buy an expensive, unregulated private product is nothing less than taxation without representation. If California were to follow the Massachusetts model for mandatory private insurance purchase (the only one in the United States), Californians would have to prove on their tax returns that they were insured or face tax penalties.
Insurance companies, meanwhile, remain beholden only to profit-driven shareholders, not taxpayers or their elected representatives. That will mean either bigger premiums or fewer benefits. In Greenfield, Mass., for instance, a couple in their 50s with one child pays $767 a month for the cheapest mandatory health plan, one without prescription drug coverage. If legislators want to enact their universal private insurance program, they should do it honestly through an across-the-board tax -- not a backdoor tax like this.
Most important, mandatory private insurance on this scale will not work. Mandatory auto insurance, which has been in force in California for more than two decades, has failed miserably. That’s why a portion of our auto insurance premiums today go to pay for “uninsured motorist” coverage.
One in seven drivers has no auto insurance, compared to one in five without health insurance under a nonmandatory system. California’s auto insurance is the most tightly regulated in the nation, and because of that, premiums have declined since Proposition 103 was passed in 1988. When car insurance was required, but before the industry was regulated, the uninsured motorist rate was double what it is today.
We can choose not to own a car and not to be subject to mandatory insurance, as inconvenient as that might be. Californians’ only choice to avoid mandatory health insurance would be to flee the state.