Will Health Insurance Mandates Be Effective?

Published: Tue 15 Dec 2009

Wendy Blair

In spite of the mandatory car insurance laws present in all but two states, millions of drivers on American roads don't have car insurance. As a result, critics of the health care reform bill promoted by President Barack Obama question what the chances are that these same scofflaws will take health insurance mandates any more seriously.

Auto insurance mandates, which industry experts say have not made the roads any safer or reduced car insurance costs, have existed in the United States for almost 40 years. Their questionable success has brought up important questions about how effective insurance mandates really are.

"Not everyone complies," explains Scott Harrington, a health care and risk management professor at the University of Pennsylvania. "The auto insurance mandate is almost everywhere. But it's not rigorously enforceable."

The CEO and president of the Property Casualty Insurers Association of America, David Sampson, points out that the personal financial circumstances of drivers, not the laws of their states, are better predictors of whether they have auto insurance.

States with elevated poverty rates demonstrate a concomitant rise in uninsured drivers, Sampson said. Essentially, people don't buy car insurance when they don't have the money for it.

It stands to reason that they would make the same choice about health insurance, so the key for Congress is to figure out a way to enforce the mandate without foiling the program.

If punitive fines are too low, healthy people may opt to forgo coverage and pay the fees. On the other hand, if the fees are too high, Americans may reject the bill or express concerns about ending up in jail for not having medical coverage.

In the House's version of the bill, the law would fine Americans up to 2.5 percent of their adjustable income by 2017, while the Senate bill would levy fines of up to $750 annually.

Mandating that everyone carry medical insurance can ideally help distribute the burden of medical expenses. Along with planned subsidies to assist the poor to buy into a coverage plan, the "individual mandate" inches Democrats nearer to adding millions of uninsured Americans into health plans.

During his campaign, Obama did not endorse an individual mandate, but he now claims that his thinking has progressed.

"We're not going to have other people carrying your burdens for you any more than the fact that right now everybody in America, just about, has to get auto insurance," Obama explained in September on the "This Week" show on ABC.