Individual Insurance Mandate Comes into Play

Many political leaders – and now some leading insurance companies – are arguing that the government should require all Americans to have health insurance.  Sen. Max Baucus (D-MT) advocates a federal mandate on individuals in his health overhaul blueprint.  America’s Health Insurance Plans and the Blue Cross and Blue Shield Association, two insurance trade groups, came out this week in favor of a mandate.

They argue a very valid point:  If you guarantee that insurers must sell policies to anyone who wants to buy one, many people will wait until they get sick to buy it. That means there wouldn’t be enough money in the insurance pool to pay for care, because healthy people wouldn’t be paying in. It wouldn’t really even be actual “insurance,” as that is understood, where people pay premiums over time to protect against the risk of very expensive medical bills.

Since guaranteed issue is a popular proposal in a new health care regime, insurance companies know they have to prevent devolving to a lopsided pool where everyone who has “insurance” is sick. So they’re saying they support an individual mandate, which would require everyone to purchase insurance by some yet-to-be-specified date to avoid this adverse selection problem.

This would result in major losses of freedom for consumers. First of all, they would be compelled to pay for insurance or be fined for non-compliance.

New York Times reporter Robert Pear wrote Nov. 19: “Insurers did not say how the government should enforce an individual mandate : whether through fines, tax penalties or other means. Politicians have also been reluctant to specify details of enforcement, which could prove highly unpopular.”

Another glaring detail, to which Pear alluded, is that if everyone is required to buy health insurance, no politician is going to let the insurance companies decide how much it should cost.

President-elect Obama’s plan calls for regulation of private insurance to see that its prices are “fair” and comparable to that of his proposed government insurance program.  This could mean that younger, healthier people would be charged more for their mandatory insurance so older, sicker people don’t have to pay so much.

Ultimately, these policies would be the death knell for the private insurance industry – and consumer choice.

It is in consumers’ best interest to retain private insurance as an option, rather than yielding that function to the federal government. And most people understand this:  A recent study noted that Gallup polls over the years show Americans prefer a private system to a government-run one.