Why do we pretend that an insurance mandate will help the health care crisis?

How to fix health policy.
Jan. 20 2010 11:55 AM

Grand Illusion

Why do we pretend that an insurance mandate will help the health care crisis?

(Continued from Page 1)

Still, if we generously assume the number of uninsured really decreased from 6.4 percent to 2.7 percent, about 233,000 people gained coverage based on the state population size—a significant discrepancy from the 400,000 cited previously by the health secretary. This matters when one sees as a critical piece of data: the numbers of new enrollees in MassHealth and Commonwealth Care, which are the state-sponsored free and heavily subsidized health plans for the poor. According to the state's 2009 report, these programs accrued 276,000 new members after the 2006 reform made it easier to qualify for them—which is even more than the 233,000 people considered newly insured.

Further, the state report shows that private insurers' total market share fell from 85 percent to 80 percent following reform, suggesting the real growth occurred in the state-subsidized plans. After 2006, enrollment in state-paid plans soared by 40 percent, while private-insurer enrollment grew only 2 percent, even though out-of-state enrollees, partially state-subsidized members, disabled people on Medicare, and double-counted individuals with more than one private insurer were all lumped into the "privately insured" category.

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The upshot: The reduction in the uninsured is the result of government-sponsored health plans for the poor, not a sudden increase in people and employers willing to buy policies due to the new mandate. Why, then, do politicians continue to pretend that effective reforms do anything other than give away health insurance to those who couldn't afford it?

They're avoiding hard truths. Health costs are escalating at an unsustainable pace, which invariably will lead to high out-of-pocket payments, fewer health benefits, loss of coverage altogether, and lower take-home wages for many workers. (That's already happening in Massachusetts.) The theory behind the mandate was that forcing people to buy insurance would expand the risk pool, add new money to the system, and offset these rising costs. Unfortunately, the uninsured are the least able to contribute enough money to save the system. There is a moral imperative to offer health care to those without it, but it's dishonest to pretend that an employer and individual mandate will do anything about it. Mandates are a political sideshow; the actual resources to buy policies still have to come from somewhere (that is, higher taxes). That's the hard lesson state governments learned in the 1990s as they repealed their high-minded reforms.

There's another reason lawmakers pay lip service to the mandates. They foster the politically useful illusion that market-based nudges toward private health plans will eventually solve the problem of the uninsured. That sleight of hand benefits commercial insurers, who successfully dispelled any serious discussion of a broad public solution like the Medicare for All bill advanced by the late Ted Kennedy.

Though the plans unquestionably will cover more Americans by raising taxes, they'll still leave millions without insurance. We'll hear again about the failure of the market in health care and wonder why more personal responsibility failed to fix the health insurance crisis. And our leaders will pretend they didn't see it all coming.

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