Mandatory health insurance fails in theory and in Massachusetts

America's Health Insurance Plans (AHIP), a trade group representing more than 1,000 insurance providers, has come out in favour of a law requiring everyone to buy what they sell. This may be the wave of the future: if people don't want to buy what you sell, get a law passed making them do it anyway, says health economist Greg Scandlen.

But this mandate approach isn't going so well in Massachusetts, which remains the highest profile state to implement an individual insurance mandate. In fact, if the demands for "evidence-based medicine" were applied equally to public policy, policymakers would run away from the idea of mandatory coverage as fast as possible, says Scandlen:

State costs have gone up so much that Massachusetts has decided to cut payments to physicians and hospitals, reducing access to medical services.

The state is also planning to mandate an increase of 10-12 per cent in insurance premiums while cutting payments to physicians and hospitals by 3-5 per cent; this will reduce access to care even more.

Even the poor (who have been aided under other programs) are being hurt; the Cambridge Health Alliance, which has long provided care to the indigent, is cutting staff, reducing services and limiting referrals to specialists in an effort to stay solvent in the face of rising costs and reduced payments.

In addition to all these problems, costs are skyrocketing because of special interest pleading the politicians crafting Massachusetts's mandate found simply irresistible. Thus, the program is now costing taxpayers $400 million more than originally advertised, 85 per cent more than the promised cost.

Mandatory insurance violates insurers' and consumers' right to act in their own best interests by forcing insurers to sell and customers to purchase insurance on terms and prices dictated by government decree. This destroys the very conditions that give insurance any value at all, concludes Scandlen.

Source: Greg Scandlen, Mandatory Health Insurance Fails In Theory and in Massachusetts, Health Care News (Heartland Institute), February 2009.

For text: http://www.heartland.org/policybot/results.html?articleid=24504

For more on Health Issues: http://www.ncpa.org/sub/dpd/index.php?Article_Category=16

FMF Policy Bulletin/ 10 February 2009