Yesterday, I read a very interesting op-ed about universal coverage: Bad Medicine For Health Care.
Individual mandate supporters typically justify the policy by citing the problem of uncompensated care. When uninsured patients receive health services but don’t pay for them, the rest of us end up footing the bill one way or another. So advocates of insurance mandates contend, plausibly enough, that we should make the free riders pay.
But how big is the free-rider problem, really? According to an Urban Institute study released in 2003, uncompensated care for the uninsured constitutes less than 3% of all health expenditures. Even if the individual mandate works exactly as planned, that’s the effective upper boundary on the mandate’s impact.
Savings of less than 3%? That doesn’t sound so good.
What about the states that mandate minimum coverage levels? Surely that does some good?
Some proposals couple mandates with subsidies for the purchase of private insurance. As far as policies to encourage more private coverage go, you could do worse. But as long as the public has to subsidize the formerly uninsured, the problem with free riders has not been solved. We’re just paying for them in a different way.
Even now, every state has a list of benefits that any health-insurance policy must cover—from contraception to psychotherapy to chiropractic to hair transplants. All states together have created nearly 1,900 mandated benefits. Of course, more generous benefits make insurance more expensive. A 2007 study estimates existing mandates boost premiums by more than 20%.
Oops. Maybe if we allowed people to buy only the coverage that they actually needed, more people could afford coverage.
Some people will not comply: 47 states require drivers to buy liability auto insurance, yet the median percentage of uninsured drivers in those states is 12%. Granted, that number might be even higher without the mandates. The point, however, is that any amount of noncompliance reduces the efficacy of the mandate.
Let’s assume that 12% of the U.S. populace ignores an individual mandate and doesn’t buy health coverage. What’s 12% of 300 million people? Oh, about 36,000,000 people. That’s about the number of people in the U.S. that currently don’t have healthcare.
I’m supremely skeptical that passing universal healthcare will do much to help Americans get better healthcare.