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REHABILITATING HEALTHCARE

Health insurance: Everybody into the pool

Requiring all Americans to obtain insurance is integral to slowing spending and improving care.

September 26, 2009

Republicans and Democrats have finally found common ground in the debate over the healthcare reform bills moving through Congress. Unfortunately for the bills' advocates, the two sides are united in their distaste for a central part of the legislation: the requirement that every American obtain health insurance. The complaint from the right is that forcing people to buy policies is an unconstitutional infringement on individual liberty. The critique from the left is that the mandate imposes too great a burden on members of the working class, who would have to spend up to 12% of their incomes to buy policies. Some say that the mandate wouldn't be fair unless the government slaps price controls on insurers to prevent costs from climbing even further.

Both sides have a point, although we don't think a mandate is unconstitutional or that price controls would be effective. It seems coercive to require healthy people to buy policies they don't believe they need. But how many drivers consider themselves accident-prone? And yet we require every car owner to maintain insurance in order to pool risks and spread the costs generated by the fraction who do get injured behind the wheel. Nor does it seem fair to demand that people buy health insurance when the price is rising so rapidly. But it's hard to fix the inefficiencies and misaligned incentives in the healthcare industry unless all consumers are covered by insurance policies that promote preventive medicine and wellness.

Here's another reason for an individual mandate. To make coverage available to the people insurers routinely reject -- the ones with a history of costly ailments -- the bills would require that insurers offer policies to everyone, with premiums based on customers' location and age instead of their medical histories. Such a system would give people no incentive to buy coverage, however, until they needed medical care. Unless everyone were required to obtain insurance, only the least healthy people would sign up, and premiums would skyrocket.

Individual mandates are merely a means to an end, so the bills' sponsors should be willing to explore other approaches, such as creating subsidized high-risk insurance pools to cover individuals who've been denied conventional policies. They should also attack costs more aggressively and provide more options for affordable coverage. Still, we've yet to see an alternative that solves the inefficiencies caused by uninsured and underinsured consumers waiting too long to obtain care. That's why we continue to back an individual mandate as an integral part of the effort to slow the growth in spending and improve the quality of care for all Americans.

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