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Thursday, September 6, 2012

Wriggins on the Compulsory Auto Insurance/Individual Mandate Analogy

Jenny Wriggins (Maine) has a short piece on the analogy between compulsory auto insurance and the individual mandate in the Affordable Care Act at the Scholars Strategy Network.


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The "Auto Insurance" comparison falls short in several ways. Mandatory auto insurance is administered at the state and not the national level. It would be analogous if everyone in the country were forced to buy auto insurance simply because they lived in the United States, and it was called a tax. After all, everyone uses transportation sooner or later. That analogy would make more sense than one administered at the state level requiring drivers to buy insurance.

It can be argued that any state mandated insurance, backed by the policing power of the state is a "tax." I did that in law school, and was informed by professors that I didn't understand tax law. But as it turned out, Justice Roberts called insurance mandated by the PPACA a tax.

There are several problems in applying a model that works on the state level to a national level. As the writer notes, there is no clear way to force people to buy medical insurance. Unlike state mandated auto insurance, there is no guarantee that medical costs can be controlled. The recent Massachusetts experience does not bode well. 98% are insured, but costs have exploded, and wait times to see doctors are twice the national average. And at least 25% of Massachusetts medicine is propped up by the federal government. Private insurance there is the most expensive in the nation (after New York).

It is clear a main goal of the PPACA was to divert as many patients as possible into Medicaid, then slowly turn this into a single payer. However, SCOTUS' decision that the feds cannot coerce states into increasing Medicaid coverage will prove a fatal flaw in the whole plan. If employers opt to pay the federal fine and drop insurance for workers, these will be pushed into a system which may not have a Medicaid program to cover them. Even now, the CBO estimates 30 million will remain uninsured under the best case scenario for ObamaCare. This means a minimum of 10% of the population will remain outside the insurance pool. Here the car insurance analogy fails, too. Medicaid is an expensive program which does not work well.

Finally, there never was any way to pay for ObamaCare. When the CLASS Act was scuttled last fall, the wheels began to come off the whole thing. Diverting money from Medicare to pay for ObamaCare will likely prove politically impossible. Considering the federal government borrows 40 cents on the dollar, none of this is economically tenable over the long term. Once again, the inability of the feds to force expansion of Medicaid coverage at the state level weighs heavily on the success of the whole thing.

Posted by: Tony Francis MD JD | Sep 7, 2012 8:10:54 PM

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