Cato Critiques Mandatory Health Insurance


Massachusetts has just mandated that its citizens must purchase health insurance. In a new policy analsysis, "Individual Mandates for Health Insurance: Slippery Slope to National Health Care," the Cato Institute's director of health and welfare studies, Michael Tanner, offers some thoughtful criticism of such mandatory private health insurance schemes. Tanner highlights the difficulties in enforcement, in distributing insurance subsidies to the poor, and the problem of mandate creep.

Tanner writes:

Individual mandates cross an important practical and philosophical line: once we accept the principle that it is the government's responsibility to ensure that every American has health insurance, we guarantee even more government involvement with and control over large portions of our health care system. Compulsory, government-defined insurance opens the door to even more widespread regulation of the health care industry and political interference in personal health care decisions. The result will be a slow but steady spiral downward toward a government-run national health care system.

Of course, we are already on a slow steady downward spiral to a government-run national health care system. The Fed and states already pay for nearly 50% of all heath care. Tanner's way out of this death spiral?

On a fundamental level we must shift the health care debate away from its single-minded focus on expanding coverage to the bigger question of how to reduce costs and improve quality. That will require the introduction of market mechanisms to give consumers more control over and responsibility for their health care decisions.

Lowering costs and thus making coverage affordable to more people is a great idea, but the political dynamic driving the debate is the fear by a large segment of the public that they will lose their health insurance and become bankrupt. That fear is what is driving us toward nationalized health care.

One model for mandatory private health insurance is Switzerland, though it is admittedly not perfect. Every Swiss must buy basic coverage, and people can choose to purchase additional gold-plated coverage. I hope Tanner is right and that we can change the debate in time, but mandatory private health insurance seems to me to be only politically viable way to preserve some private health care and medical innovation. It's sad that we've arrived at this sorry situation, but there it is.