Politics & Policy

Compulsive Disorder

During the Democratic presidential primaries, Barack Obama argued against forcing people to buy health insurance. But on Wednesday night, he flip-flopped and endorsed the idea.

President Obama argued that people who do not have insurance raise the premiums of those who do. But careful analyses of this effect — notably that of the Democrat-controlled Congressional Budget Office — suggest that it is minuscule. (Some of the uninsured, by paying out of pocket for medical expenses, actually subsidize the rest of us.) Obama’s solution to this modest cost shifting would increase premiums far more than ignoring it, for requiring everyone to purchase health insurance would lead to a lobbying free-for-all. The experience of state regulation strongly suggests that producer interests would overwhelm consumer interests: People would pay high premiums for coverage they may not need or want, such as coverage for drug abuse.

The effect would be a tax increase for millions of people. People who have turned down their employer’s offer of health coverage in favor of higher wages would be forced to take a pay cut. Because of the predictable effects of lobbying, even those who already have insurance would be forced to part with more and more money to pay for more expensive insurance.

The president has another reason for favoring compulsion. He seeks regulations on the insurance industry that will not work unless people are forced to buy its products. If insurers have to charge the same price to all comers regardless of their health status, healthy people will have no reason to sign up. They will instead wait until they get sick and get charged the same rate. But if only sick people buy insurance, premiums will skyrocket. Insurance markets will collapse.

An order for all people to buy insurance would not so much prevent that collapse as disguise it. Once insurance companies have to sell policies to sick people and healthy people at the same rates — or to put it another way, once people are no longer allowed to buy insurance policies that give them a discount for being healthy — those policies are no longer insurance against the risk of getting sick. What “insurance companies” would instead be selling is a share of the nation’s medical resources. Viewed from this angle, the same need for compulsion presents itself. If you think that you are likely to cost less than your share of the nation’s medical expenses, and you have freedom, you may reject this bad deal. But if only the people who expect they will have higher than average medical expenses take the deal, again, the system becomes untenable. The president wants insurance to be structured in a way that cannot arise in conditions of freedom. Hence those conditions must be revoked.

Obama drew an analogy between compulsory health insurance and compulsory auto insurance. But never before has the federal government required the purchase of a product as a condition for lawful residence in this country. (No state actually forces anyone to buy a car.) An individual mandate would be an extension of federal power that raises serious constitutional issues. It may even be said that while the “public option” — the proposal, that is, for a government-run insurance program — has caused the most controversy for its socialistic aspects, it is the mandate that most clearly exposes the coercive nature of the liberal version of health-care reform.

It is not as though we had no alternative. If we want to reduce the tiny amount of cost shifting that the federal government’s requirement that all people be able to get emergency care entails, we could enable young and healthy people to purchase cheap policies to insure them against catastrophic events. Obama prefers to mulct them in order to advance his ideological agenda. There is no reason for the rest of us to share this preference.

Obama’s opposition to a mandate in 2008 did not keep him from winning majorities among Democratic voters, who make up the portion of the electorate most enthusiastic about health regulation. Congressmen and senators can oppose this coercion without any fear of adverse political consequences, and should. Republicans, in particular, have in the past voted unanimously against tax increases much less egregious than this one. If the administration has to give up the “public option,” it will merely have to settle for socialized medicine on a longer time frame. Abandoning the individual mandate would truly force it to scrap its plan and start over, as the country seems to want and the public interest requires.

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