Mandatory Universal Health Insurance?

Perhaps it's a better idea than you think it is.


Should the federal government require all Americans to buy private health insurance? This intriguing proposal is being pushed by the New America Foundation, a liberal policy shop in Washington, D.C. "Universal coverage in exchange for universal responsibility," is how the NAF characterizes it.

Before rejecting the proposal out of hand, stop and consider that it may be a second-best alternative for relieving the growing political pressure to create some sort of nationalized single-payer health care system modeled on the nearly bankrupt and increasingly shabby health care schemes in Canada and Western Europe. Make no mistake about it—private health care is imperiled in the United States, given that all of the Democratic presidential hopefuls want to expand existing government health care programs and/or create some sort of universal government-run system. The NAF proposal could derail this pernicious political dynamic.

The devil is in the details, of course. Still, the NAF plan offers some interesting possibilities. For example, mandatory health insurance coverage might be combined with desirable features such as medical savings accounts, which would encourage people to save and invest for future medical emergencies.

The NAF proposal preserves private insurance and allows consumers to choose among competing insurance plans and coverage options. Most intriguingly, NAF offers a way out of the dysfunctional employer-financed third-party-payer system that is so grievously distorting our current health insurance system. Employers would eventually devolve responsibility for health insurance to their employees by giving them the money the companies currently pay out to insurance agents. Employees would then have a strong incentive to shop around for the best health care deals, putting pressure on insurance companies to keep costs low.

In an ideal world every uninsured person would be able to pay for his or her medical expenses out of pocket. We obviously don't live in an ideal world. However, all uninsured Americans can receive health care that they don't have to pay for. Health care for the uninsured is paid for by tax dollars spent on Medicaid or the state Children's Health Insurance Programs, or through higher insurance premiums and medical charges to those covered, to make up for the losses incurred by doctors and hospitals when they treat the uninsured.

So, asks the NAF, why shouldn't we require people who now get health care at the expense of the rest of us to pay for their coverage themselves? Although the NAF does not explicitly address this issue, mandatory health insurance would mean that Medicaid and state CHIPs could be eliminated, since poor Americans would be covered by private insurance. This is really good news, because the slowly expanding Medicaid and CHIP programs have been used to inexorably socialize more and more of the U.S. health care system.

Okay. There's no getting around it, mandatory health insurance would essentially be a new tax. However, it is not unlike the state mandates that require drivers to purchase auto insurance or pay into state-run risk pools. Consider also that even the libertarian Cato Institute's proposals for reforming social security do not eliminate mandatory social security payments, they privatize them. Similarly, school vouchers proposals, like those proposed by economist Milton Friedman, also mandate that children receive an education. As the Rose and Milton Friedman Foundation notes, universal school vouchers would allow "all parents to direct funds set aside for education by the government to send their children to a school of choice, whether that school is public, private or religious." This separates "the government financing of education from the government operation of schools."

Under the NAF plan, the federal government would provide subsidies to those people who could not afford an insurance policy—health insurance vouchers, if you will. This idea is comparable to the health care tax credit proposal by the free market health care think tank, the Galen Institute. Specifically, the Galen Institute suggests that the federal government offer tax credits of $1,000 per individual and $3,000 per family, to help currently uninsured Americans buy health insurance.

Maintaining our private health care system is vital, because American health care and medical science are the most advanced and innovative in the world. If a national single-payer health care system is adopted, most medical progress will be stopped in its tracks, and we'd all have the same equally bad health care forever. The NAF proposal offers a way to maintain our private health care system, expand consumer choice, lower costs, and allow medical progress to advance. It isn't perfect, but it's a lot better than the more politically likely alternatives.