Health insurance? We don't need no steenking health insurance!
I've been listening to NPR's coverage of the national
debate over the supposed health care crisis in the United States.
This evening's report mentioned hearings that were held today by a
Senate committee that is trying to come up with a bill that will
garner enough votes to avoid a filibuster by opponents of the
measure. One of the items that was being discussed, and which seems
to be locked in to all versions of the reform bills under
consideration, is a mandate that all Americans purchase health
insurance or face fines and/or other punitive measures designed to
ensure compliance with the wishes of the State.
And it seems as though no one dares to point out what
an incredibly stupid thing such a mandate would be. Let's leave
aside for now the libertarian objections to such a provision and look
at this on its own merits for the time being. Bear in mind that one
of the goals the reformers are aiming for is to achieve a reduction
in the cost of health care. And one of the first things these
altruistic power-brokers want to do is put the coercive power of the
State to work ensuring that every person in the United States is
covered by health insurance; for their own good, of course.
Though arguing from analogy is, necessarily, a
difficult thing to do as no two situations are identical, there is
one area from which we may get a good idea of what lies ahead on the
path of mandating the purchase of health insurance. Auto insurance
is a field from which we can certainly get some idea of what will
happen when the State requires everyone to be covered by some form of
health insurance. If what has happened here in Michigan with
mandatory auto insurance coverage is any indication the results of a Federal health insurance mandate are
going to be anything but pretty. Michigan is one of several states
that bought into the argument that our court systems were being
overwhelmed by the numbers of auto accident suits being filed and that auto insurance was getting too expensive. So the state's legislators
enacted something known as “no fault” automobile accident
insurance. The idea is that a person's own auto insurance provider will
cover the costs of damages, health care, and so on. Whenever a policy
holder is involved in an accident the insurance provider simply pays
the bills and life goes on. Not only was this scheme supposed to
lessen the load of civil lawsuits working their way through the court
system, but auto insurance costs were supposed to go down because
insurance companies would no longer need to pay for expensive
lawyer's fees associated with all of those court cases: at least that
was the theory. To ensure that everyone benefited from this wonderful new idea the Michigan legislature mandated that everyone purchase auto insurance, at certain specified minimum levels.
The reality has, surprise, surprise, been considerably
different from the roseate picture that was painted by the proponents of the original measure. For one thing mandating the purchase of auto insurance
handed the insurance companies a captive group of customers;
customers who had to buy their product regardless of the cost.
Unsurprisingly, the cost of auto insurance in Michigan has done
nothing but increase since the “no fault” law was put in place
back in the 1970s. Among the conclusions reached in a 2005 study by
The Foundation for Taxpayer and Consumer Rights are these:
Premiums
are 19% higher in no-fault states than in personal responsibility states.
States
with some form of no-fault insurance are consistently the highest priced in the nation.
Auto
insurance premiums rose 92% faster in no-fault states than in personal responsibility states between 1998 and 2002.
(see:
http://www.consumerwatchdog.org/documents/1812.pdf
for more details)
According
to an item from the Mackinaw Center for Public Policy: “Even
when one disregards the high level of taxation to which the insurance
industry is subjected, the additional cost built into an auto
insurance policy in Michigan as a result of government's many other
intrusions in the market is staggering. For instance, laws force
insurance companies to sell drivers more insurance than even the
companies believe they need. Companies are prohibited by other laws
from assigning risk based entirely on where losses occur, forcing
those who live in low-risk areas to subsidize those who live in
high-risk areas. These edicts accomplish political goals that could
have been paid for out of general revenues, but the Legislature has
found it easier to hide them in the cost of insurance. “ (See:
https://www.educationreport.org/article.aspx?ID=94)
Other
studies of the field indicate that Michigan is not alone in
experiencing increases in the cost of auto insurance following the
passage of laws that mandate the purchase of it. The cost increases
come as no surprise and were predicted by opponents of the Michigan
law prior to its passage. After all, it's only natural for
businesses to raise the prices of their goods and services when they are
guaranteed sales by virtue of the police power of the State. There
is some limit to the cost of auto insurance as competition does still
exist within the insurance marketplace, but those limits are higher than would be the case in a marketplace in which
the customer is free to walk away from the market entirely if she
finds nothing that meets her needs or budgetary requirements.
Unless
the Federal government is going to place arbitrary limits on the
prices that may be charged for differing health insurance policies
there is no reason to believe that what has happened in Michigan and
other states which mandate the purchase of auto insurance will not
happen on a national scale with health insurance. Along with higher
insurance costs will come the need for higher levels of subsidy
payments to those whom the all-knowing State decides are too poor to
pay for the insurance themselves. That's one of the reasons that
President Obama and his close allies are pushing so hard for the
so-called “public option” for the purchase of health insurance.
They see such a provision as a means of ensuring that health
insurance companies do not take undue advantage of the consumers who
will be forced to purchase some product they may not want or need.
The public option is also a means of dressing up the wolf of a
single-payer insurance scheme in the guise of the sheep of consumer
protectionism. Of course, whether or not the “public option” is
included in the final law the costs of health insurance will continue
to rise. The proponents of the public option won't admit that, but
it is inevitable. The actual cost increase may be hidden within the
general tax increase which will be necessary to pay for the
President's brainchild but be there they certainly will be.
There
is much to dislike about any of the proposed “reforms” of the
health care system as all of those put forth by the politicians in
Washington result in an increase in the power of the State. However,
the idea of mandating the purchase of health insurance goes beyond
simply putting in place new regulations for doctors and other health
care providers to keep track of and hope not to transgress.
Mandating the purchase of health insurance not only increases the
intrusions the Federal government will make into all of our lives, it
will also directly add to the already high cost of health insurance.
This cost increase will “require” the State to further subsidize
the cost for low income households (which means raising taxes on
those in the middle class and above to pay for that “benefit”).
The result will be increased costs, heightened Federal government
intrusiveness into all of our lives, increased levels of taxation,
and most likely of all – no improvement in the overall health of
the American people; which is supposedly the object of this whole
exercise in futility. So long as the Federal government is not
forced to give up its role as regulator of the nation's health care
the situation will not improve – we'll simply end up back here
again in a few years listening to the familiar complaints of the
regulators (who will have failed in meeting any of their supposed
objectives) that they need ever more money and power to achieve their
goals.