Mandatory insurance takes what’s wrong with health insurance and makes it worse.
It means higher costs, affordable insurance becomes illegal, and less incentive to please patients. Amendment 63 would block Colorado politicians from imposing mandatory insurance. It would also prevent the feds from pressuring them to enforce Washington’s version of it.
In opposition, Edie Sonn of the Colorado Medical Society says Amendment 63 will increase costs because the insured “are forced to absorb the costs of the uninsured.” This cost-shifting argument is both wrong and deceptive.
Mandatory insurance will increase costs and impose much larger cost shifts.
President Barack Obama says we’re “paying 900 bucks on average” because some uninsured patients don’t pay bills. He’s referring to a flawed Families USA study.
Independence Institute economist Linda Gorman shows that it over-estimated the cost of uncompensated medical care. It “disregarded categories accounting for roughly 33 percent of the payments” for the uninsured such as auto insurance, community health centers, and various government programs.
The cost shift is no more than $85 annually per insured Coloradan, according to a 2007 Lewin Group’s report for the Colorado Blue Ribbon Commission. This is consistent with a recent Kaiser Family Foundation Report, which concludes that it’s at most “1.7 percent of private insurance premiums.”
This amount is trivial compared to how much mandatory insurance increases premiums, such as in Massachusetts. The most affordable plans sold through Massachusetts’ insurance exchange cost almost three times more than those available in Fort Collins. The Boston Globe reports that the premiums in Massachusetts are the highest in the country and emergency room visits and costs have increased.
The Massachusetts Medical Society reports “long waits, more practices are closed to new patients” for primary care.
Mandatory insurance entrenches the main cause of high health care and insurance costs: the patient is rarely the paying customer. Health care prices decrease or stabilize when patients pay, rather than insurers.
Examples include Lasik, cosmetic surgery, and, whether you like it or not, abortion.
But patients are rarely customers because the tax code and other controls favor excessive insurance. The typical health plan is not insurance, but prepaid health care. If car insurance worked this way it would cover predictable expenses such as new brakes.
Prepaid health care insulates patients from the true costs of treatment.
Patients are typically unconcerned with prices or lower-priced alternatives.
Since the patient isn’t paying, physicians sometimes exaggerate diagnoses such that insurers, Medicare, or Medicaid finance expensive treatment. Prices soar.
Mandatory insurance makes this worse by banning lower-cost insurance policies. Politicians mandate costly benefits and limit deductibles, which both increase premiums and further distort insurance into prepaid health care.
A typical mandated benefit increases insurance premiums by about 0.75 percent, concludes a study led by MIT economist Amanda Kowalski. Health plans under the Obama health control law must include at least ten mandated benefits such as laboratory and preventive services (HR 3590, sec. 1302).
The CMS opposes Amendment 63 by objecting to cost-shifting. But mandatory insurance does this, too. Banning lower-cost policies makes people buy more costly and comprehensive insurance than they’d like. This is like requiring minivan owners to pay the same car insurance premiums as Porsche owners.
Politicians should repeal damaging political controls, not add them. For example, change the unfair pro-insurance tax code so it no longer punishes people for paying cash for medical care. Also, allowing people to buy more affordable policies sold in other states would decrease the number of uninsured by millions.
There’s no right to medical care, but we have the right to seek it through voluntary exchange. Colorado Amendment 63 would protect Coloradans from politicians seeking to violate this right.
Brian T. Schwartz writes for the Independent Institute’s PatientPowerNow.org blog.