Obamacare News Blog

Ban on manditory insurance?

Lawmakers in 34 states are attempting to make amendments to their constitutions to stop government health insurance mandates. Is it a good idea?

The proposed ban would make it illegal to penalize those who choose not to carry health insurance. This generally is a response to the current democratic initiatives in the Congress and Senate. I guess you could focus on whether this technique would even work. If there was a sweeping federal health bill that included mandatory purchasing of health insurance, it would most likely over-ride these state initiatives. The bigger issue concern we have is that this is just another illustration of how dysfunctional the health care reform process is. Rather then looking for real solutions, one group is trying to cram down reform while the other group is trying to block it.

Let’s get back to the core issue. COST. As everyone knows, health care costs in the United States are out of hand. According the the Kaiser Foundation, the average cost of a family policy offered by employers increased 5% in 2009 to a whopping $13,375. For the same amount of money, a small business owner could purchase a 2010 Nissan Versa 4-door car for each employee each year! Talk about benefits! 

One way to address costs is to get more people into the insurance pool.  There would be more healthy people paying premiums and this could offset the claims of those that get sick and could bring down the price of insurance. This is why some people support the mandate that everyone should purchase insurance. And while this may make sense in the abstract is would be very difficult to enforce. Yes, many make the comparison to the mandate to purchase car insurance. But there is a big difference. You can choose not to drive car but to choose not to live isn’t really an option. So a health insurance mandate doesn’t give individuals the chance to opt out like those who do not want to pay for car insurance. Also car insurance mandate is easy and cheep to enforce. No car insurance = no drivers license. We don’t think there is the equivalent in health care.

By the way, there is currently a mandate (of some sort) in small business health insurance.  Most companies must require that 70% or more of their employees participate in the plan. This is to avoid what we call “adverse selection” where only the people with health issues join the plan. So this mandate aims at getting more healthy people into the plan yet prices are still very high. So a mandate cannot be seen as a fix all solution.  One area they seem to be leaving alone are maximum HSA contribution limits for small businesss.

So what is the solution? Well, while we do think it is challenging to implement, we are not yet comfortable ruling out some sort of incentive to get more people into the insurance pool whether you call it a mandate or not. We do believe, however, that there are a few more politically viable alternatives that lawmakers should focus on right now.

1) Electronic Record Keeping
2) Transparency of Costs
3) Standard Negotiated Rates.
4) Addressing our National Obesity Crisis.

If we address the above we will be taking a big step to curb runaway health insurance costs. Each of these issues will be explored in more detail in future blogs and we look forward to your thoughts. In the meantime, everyone should consider HSA plans. They are a step in the right direction of health care reform. Coupled with transparency of costs we could really see health fees go down!



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