Heath Insurance Mandates without Cost Containment Measures Could Cost Consumers More
[10/09/07]
On the surface it may seem proposals like the one compromised on by Governor Arnold Schwarzenegger in California that require all citizens have health insurance are a good thing. Democratic front runner Hillary Clinton’s New Millennium version of “Hillary Care” proposed much the same thing - a mandatory requirement that all Americans purchase health insurance - or face fines and penalties.
The problem with both and similar proposals being drafted by Governors and legislators nationwide is that such mandates do not have premium caps. Under such plans businesses will have to pay their share in theory, and poor citizens that cannot afford to purchase most private health insurance plans will be subsidized. However without caps on costs, those in the middle who do not have health insurance benefits from work, but earn too much to qualify for subsidies, will be squeezed, and forced to purchase something that could cost as much as $12,000.00 a year for a family of four.
On the other hand mandatory participation in a cost-effective government run program such as Medicare, can and does work to provide affordable health insurance to seniors.
The type of unregulated mandates in the works may in effect provide affordable heath insurance - but will they actually provide affordable healthcare? Some pundits think not. They believe that the mandated health insurance plans since they will be unregulated, will opt to keep health insurance premiums low by issuing bare bones policies with very high deductibles. Keeping the price consumers pay for their health insurance relatively low, but actually increasing the costs of healthcare because they will have to pay greater amounts out of pocket.
Still those in favor of such mandated plans say that if consumers are in effect forced to pay more for their routine healthcare themselves – they are more likely to take better care of themselves. They will also be more likely to shop around for the best prices for healthcare services. And in a system that does not call for regulated or standard pricing for healthcare services, market forces can shape prices just as they do in other business. Advocates point to health services that are not traditionally covered by health insurance where this has proven to be the case. Take for example LASIK eye surgery the cost of which has dropped more than 50% since it was first introduced due to consumer demand for the procedure, and competitively shopping for it.
Yet as California is setting the stage for passage of such an unregulated health insurance mandate, there are those in the state that feel it is doomed to failure. They point to the fact that despite having a law for mandatory auto insurance in effect 1 out of every 7 drivers are still driving without insurance in the state. Those with insurance are forced to pick up the slack in “uninsured motorists” fees. Some consumer advocates feel this will be the same case with mandatory health insurance, with those who comply with the mandate forced to pay more to cover those who do not.
The problem with both and similar proposals being drafted by Governors and legislators nationwide is that such mandates do not have premium caps. Under such plans businesses will have to pay their share in theory, and poor citizens that cannot afford to purchase most private health insurance plans will be subsidized. However without caps on costs, those in the middle who do not have health insurance benefits from work, but earn too much to qualify for subsidies, will be squeezed, and forced to purchase something that could cost as much as $12,000.00 a year for a family of four.
On the other hand mandatory participation in a cost-effective government run program such as Medicare, can and does work to provide affordable health insurance to seniors.
The type of unregulated mandates in the works may in effect provide affordable heath insurance - but will they actually provide affordable healthcare? Some pundits think not. They believe that the mandated health insurance plans since they will be unregulated, will opt to keep health insurance premiums low by issuing bare bones policies with very high deductibles. Keeping the price consumers pay for their health insurance relatively low, but actually increasing the costs of healthcare because they will have to pay greater amounts out of pocket.
Still those in favor of such mandated plans say that if consumers are in effect forced to pay more for their routine healthcare themselves – they are more likely to take better care of themselves. They will also be more likely to shop around for the best prices for healthcare services. And in a system that does not call for regulated or standard pricing for healthcare services, market forces can shape prices just as they do in other business. Advocates point to health services that are not traditionally covered by health insurance where this has proven to be the case. Take for example LASIK eye surgery the cost of which has dropped more than 50% since it was first introduced due to consumer demand for the procedure, and competitively shopping for it.
Yet as California is setting the stage for passage of such an unregulated health insurance mandate, there are those in the state that feel it is doomed to failure. They point to the fact that despite having a law for mandatory auto insurance in effect 1 out of every 7 drivers are still driving without insurance in the state. Those with insurance are forced to pick up the slack in “uninsured motorists” fees. Some consumer advocates feel this will be the same case with mandatory health insurance, with those who comply with the mandate forced to pay more to cover those who do not.
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