Requiring health insurance won't work for Maryland consumers

December 31, 2006|By Greg Scandlen

Many people are frustrated that so many are without health insurance. Nationally, the most common figure cited is 46 million (Maryland has about 790,000, according to the Census Bureau), though some more-reliable research suggests the real number is about half of that.

Whatever the true number, it is large and getting worse. Fewer employers are offering coverage, and the cost of coverage makes it unaffordable for many people to purchase on their own.

What to do? Many people say that if people won't buy health insurance on their own, the state should pass a law requiring them to buy it. They say that will solve the problem of "free riders" - people who could be covered but would rather spend their money on other things and rely on free care when they do get sick. Such free care is not "free." The rest of us pay for it through higher medical bills and taxes.

Massachusetts passed such a law this year. Why not Maryland?

It might not be a bad idea - if there were any evidence it would work. But the notion that a legislature can wave a magic wand and change everyone's behavior is naive at best.

Maryland, along with 46 other states, requires that drivers have auto insurance coverage, yet the rate of non-insurance for auto is not much lower than the rate of non-insurance for health in this state (12 percent for auto versus 14.9 percent for health). And a mandate for health insurance would be much harder to enforce than a mandate for auto.

We can't require people to buy something they can't afford, so a mandate would have to come with a lot of subsidies. Massachusetts is subsidizing coverage for everyone up to 300 percent of the poverty level, or $60,000 for a family of four. That's a lot of people to be subsidizing, and it undermines the "free rider" argument.

Plus, it is expensive. In Massachusetts, the legislature was told its program would cost $125 million a year, but when the state filed in the bond market it revealed that the actual cost would be $276 million. That is on top of an estimated $386 million in rate increases for hospitals, physicians and managed care plans, according to Sally Pipes at the Pacific Research Institute.

So, mandatory coverage won't solve the problem but will cost a whole lot of money. Is that the best we can do?

I don't think so. Part of the reason there are so many uninsured is because health insurance has become so unaffordable. Part of the reason it is so expensive is because we have piled on so many regulations and mandates. Maryland has enacted 59 such mandates, according to the Council for Affordable Health Insurance.

It is hypocritical for the legislature to pass laws making coverage more expensive, then condemn people for not buying this unaffordable coverage.

Most people would buy the coverage if they could afford it. There is a lot the government could do to make coverage cost less: reduce mandated benefits; treat individual and group coverage alike for tax purposes; let people opt out of Medicaid and buy private coverage instead; and encourage employers to let workers choose their own form of coverage. Then it could help subsidize coverage for the remaining people who still can't afford it.

Some people would like to be covered for those high-cost services that can't be financed any other way. Other people would prefer to be covered for every runny nose. It's a personal decision based on how much they can afford to cover and how much risk they are willing to bear.

That would extend the same freedom of choice consumers enjoy in housing, clothing, and food to health care. Low-income people could get "health care stamps," as they currently get food stamps. But they would be free to decide what kind of health care to buy.

Simply mandating that everyone buy overpriced insurance may make the legislature feel good, but it does nothing to solve the problem.

Greg Scandlen is the president of Consumers for Health Care Choices, a national nonprofit, nonpartisan health reform group based in Hagerstown. His e-mail is greg@chcchoices.org.

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