Mandatory Insurance: Autos vs. Health


The National Center for Policy Analysis wonders: would mandating the purchase of health insurance, as Massachusetts will now be doing starting July 2007, do more to ensure that people actually have health insurance than mandating the purchase of car insurance does to ensure people have car insurance?

Some of the conclusions, from a brief analysis by Greg Scandlen:

Policymakers can get an idea of how well mandatory health insurance would work to reduce the number of uninsured by looking at another type of mandated coverage. Consider:

* All but three states mandate automobile insurance, but 14.6 percent of America's drivers remained uninsured in 2004, according to the Insurance Research Council.
* No state mandates health insurance, but 17.2 percent of the population lacked health coverage in 2004, according to the Employee Benefit Research Institute.
* In 17 states, the uninsured rate for auto is higher than for health.

This is a remarkable finding considering that driving is a voluntary activity and enforcement is relatively easy—making people show proof of insurance when they register their cars.

Higher punishment rates for failure to do so don't seem to correspond with increased purchase of auto insurance; the study finds that

most of the variations between the states for both types [auto and health] of insurance could be explained by two variables: 1) the rate of poverty in the state and 2) the level of health care costs in the state. No other variable was statistically significant. Specifically, they found:

* A 10 percent increase in the poverty rate was associated with a 7.4 percent increase in the uninsured rate for auto and a 7.1 percent increase in noninsurance for health.
* A 10 percent increase in the cost of health care was associated with an 11 percent decline in the uninsured rate for auto and an 8.5 percent decline for health.

These two variables explained 43 percent of the variation in the health uninsured and 27 percent of the variation in the auto uninsured. Mandatory coverage and no-fault variables, used in the auto regression, and personal income per capita variables, used in both regressions, had no significant effects.

I'm curious as to the causal links that explain this apparent connection between health care costs and auto insurance purchases.

Reason's Ron Bailey back in November 2004 wrote a detailed account of why he thinks that mandatory health insurance purchasing just might be the only hope, given current political realities, of ensuring that a vital private market in health care continues to thrive.