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Akron Univ. School of Law

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Monday, March 3, 2008

Critique of Health Care Mandates

The Health Care Blog has an interesting post entitled, "What’s wrong with individual health insurance mandates,"  by Claudia Chaufan.  She supports a single payer program and worries that a mandate-approach ignores the financial realities of our current insurance system.  She writes,

Lately, legislation including a universal mandate – a legal obligation that everybody purchase a health insurance policy – has been hailed as the solution to the health care crisis in America. At the state level, mandates have been included, for instance, in Gov. Schwarzenegger and Speaker Nunez’s “Health Care Security and Cost Reduction Act”, and at the federal level, by Hillary Clinton in her “American Health Choice Plan”. Yet many of us remain skeptical. Why? After all, if everybody is forced to buy a health insurance plan – maybe with a subsidy if you are “poor enough” – would this not resolve the problem of uninsurance? Maybe so. But the real question is: would mandating universal health insurance guarantee universal access to medical care? And the short answer is no. 

A longer answer would include that many health reform proposals promising heaven on earth rely on fantasy numbers, not facts: for instance, there is reason to believe that Swcharzenegger’s stillborn legislation would have run out of money by the fifth year of operation. Indeed, often these proposals offer no numbers at all, fantasy or otherwise: a sound study estimating the capacity of “Hillary Care” to guarantee that those who “like” their current health insurance “will be able to keep it”, as Hillary promises, has yet to be produced.  But worst of all is the tendency, popular among many health care experts, including M.I.T. professors, to commit the capital sin in health policy: confusing universal health insurance with universal access to comprehensive medical care. . . .

In a social health insurance system everybody gets insurance by virtue of being a citizen or a resident, everybody contributes to the system according to ability to pay, and everybody is guaranteed an amount and type of services. This is possible because the system, whose ultimate goal is to provide the most and best care to all participants with whatever budget it has, counts on a predictable influx of money, has as sole incentive finding the most efficient ways to spend it, is able to estimate the needs of participants, and can utilize their collective purchasing power to bargain for best prices of services and goods.

In contrast, in a system based on mandates, nobody “gets” anything, really. Rather, everybody is compelled to buy a policy, by law. Hence guaranteeing a decent amount of medical care to the population at large, that many consider a social problem, is turned into a “problem” of “every” individual or “every” family, who are forced to comparative-shop for affordable policies, while second-guessing current or future medical needs as they decide which is the best investment for their resources – a more comprehensive health policy, rent, or food.

A key assumption underlying individual mandates is that forcing an influx of “customers” into the health insurance marketplace, flooded with private insurers’ “products” made to suit a range of personal preferences will, through the powerful and reveered “invisible hand”, improve the quality of medical goods and services and bring their prices down, such that on average they will be affordable to everybody. This of course would be true, if shopping for medical services were functionally equivalent to shopping for designer shoes. Faced with an offer, you are always free to take it or leave it, depending on how good the deal is. If it is not good enough, you can always wait until the next Christmas sale. Or you can decide that you are not so crazy about those shoes after all, and shop for something else, until those recalcitrant shoe sellers realize that if they want your dollars, they have to behave reasonably, and offer the best they can at the least possible price. . . .

Under our current system, which relies heavily on private insurance, paying for medical care is insurers’ greatest “cost”. Now, like any other business, insurers’ ultimate goal is to control the costs of running their business while maximizing profits. Hence the increasingly bewildering range of “choices” of “insurance products” that make sure that insurers will not have to pay more for medical care than they collect in premiums and that there remains enough spare change to keep CEOs and shareholders happy.  And because profit is the essence of business, however much “mandate” fans boast they will force insurers to not turn people down on the basis of “pre-existing conditions”, they will not – they cannot – force them to sell policies that will not meet insurers’ profit maximizing goals. So mandate supporters remain conveniently vague whenever asked how much “consumers” will have to pay for policies offering more than minimum coverage or even what will count as minimum coverage, hoping that we won’t notice when they fail to compute out-of-pocket costs to “consumers” – deductibles, co-pays, co-insurance – as “costs”. . . .

Now, the point is not to force business to do business at a loss. The point is why, when it comes to health care, we should insist on a model that confuses health care with designer shoes and that has failed to deliver the goods. Because it is clear that choices that are meaningful, not of health policies but of doctors and services when and to the extent we need them are increasingly out of reach for ordinary Americans.

Which is why only a system based on the principle of social insurance, that spreads the risk over a large pool – all Californians, or even better, all Americans – to which all participants contribute an affordable proportion of their income, and where individuals are guaranteed real choice, not of policies but of medical services, constitutes meaningful universal health care reform.   And sound legislation exists: it is the single-payer model proposed by SB840, the California Universal Healthcare Act, vetoed by Schwarzenegger, who appears to dislike “big government bureaucracies” but can live with the 30% mark-up of the bureaucracy of private insurers. It is also HR676, the expanded and improved Medicare for All Act, conveniently made invisible every time the major media or policy thinktanks report on the health care crisis, and disqualified by Hillary as “difficult to achieve” for reasons that we are never given. . . .

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