September 10, 2009, 02:00 PM ET

Mandatory Health Insurance Is Not Like Mandatory Auto Insurance

I keep hearing comparisons between the proposal for mandatory health insurance coverage and the requirement that drivers maintain auto insurance. Sounds good, but the comparison just doesn’t work. In reality, car-insurance coverage is not mandated to all Americans, all adults, or even all licensed drivers (one can maintain a license but not auto insurance if he or she does not plan to drive a car). Auto insurance is but one price that must be paid in order to enjoy the privilege of driving.

Alternatively, the mandatory health insurance proposal would essentially require that, in exchange for the privilege of ... citizenship? Residency in the U.S.? Life? ... one must procure health insurance for herself and her family. Can pedestrians “opt out” of mandatory health-insurance coverage, and more importantly, where in the Constitution does the Federal government have the right to mandate health insurance coverage in the first place?

Oh that’s right -- through its right to collect taxes. Since the only way to implement and enforce such a mandate is through the government’s ability to levy and collect taxes, let’s be very clear about the fact that a health-insurance mandate is, indeed, a new tax. I am not an anti-tax person, so the mere fact that mandatory health insurance is a tax doesn’t make me oppose the proposal. There may be good reasons to add such a tax, and the idea might be very well received if the program is structured appropriately and the cost burden distributed equitably. What concerns me most about the proposal, however, is that it represents the increasing creep of government mandates into the lives of individuals and families, perhaps beyond the limits and ideals of the Constitution. Are we soon going to see presidents mandate that everyone get married, earn a college degree and jog 10 miles a day because of the societal benefits of each of these activities?

But even if we get our terminology straight, and we use the government’s right to levy and collect taxes to implement this new mandate, we must understand that the real difference between mandatory auto insurance and mandatory health insurance is that the former is required to protect other people (like the people who might suffer injury or property loss in an accident that you cause), while the later is in place to protect the policy-holder. Moreover, auto insurance covers catastrophic loss, but not the day-to-day maintenance of the car. We don’t’ bill our car insurance companies for gasoline, tune ups, oil changes, and replacement parts -- and if we did, probably none of us could afford to purchase car insurance. By analogy, then, if we do adopt a mandatory health insurance policy, perhaps the mandated portion of this coverage should be limited to coverage for catastrophic care.

A catastrophic-care tax might be a reasonable idea, and something that even the anti-tax contingent would support, since ultimately the insured are all paying for the catastrophic care of the uninsured anyway. Certainly one could make the case that since we all pay when an uninsured individual has a serious accident or medical condition, catastrophic health-care coverage for the individual does, indeed, protect others. Those who have private coverage could enjoy relief from this additional tax liability, and to reward good behavior, we could reduce a person’s catastrophic-care tax liability if he or she demonstrates a commitment to preventative care, such as eating well, exercising regularly, maintaining a healthy weight, and avoiding cigarettes, drugs, excess use of alcohol.

Like all legislative proposals, the devil will be in the details that still remain unclear to the American people. It may be imprudent (and just too costly) to try to overhaul every aspect of our health insurance system in a single legislative proposal, but if we can start to focus on solvable issues, slowly but surely we might be able to make real, bipartisan progress. Catastrophic-care insurance coverage may be a good place to begin, and solutions in this area may generate the kinds of cost savings that are needed to reform additional parts of the health-insurance system. And we might learn some valuable lessons through this focused effort that could enable us to develop even better solutions to the larger problem.

Incremental progress might mean that President Obama isn’t the last president to talk about health-care reform, as total system overhaul could take years to accomplish, but I think it was he who asserted that health-care reform is too important to be the victim of concerns about political wins and losses.

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Comments

1. primaryovertone - September 10, 2009 at 04:50 pm

A better idea would be for congress to address health care costs in a way that makes sense. When I go to the hospital and am billed $5 for two tylenol that should cost roughly fifty cents there is something wrong. The hospital bills the insurance company even more money than an uninsured person. This is wrong. Why is it okay for a hospital to price gouge. I am all for paying salaries of doctors and nurses but something has gone well past that point. Perhaps Congress could address unfair practices in the medical industry and see if that does not solve more problems than regulating insurance.

2. beans - September 11, 2009 at 08:06 am

I think the comparison is a symbolic one ("Look, we as a society have already mandated that certain insurance is necessary and it hasn't turned us socialist yet!").

But the car vs health insurance comparison is just as false when extended as you do here. You cannot compare the care of an automobile with the care of a human being. I, for one, would prefer that my car get totaled and not, say, my brother. You can let something go in the car, some piece of plastic that fell off somewhere or some dent; should we make people do the same? "Hey, it's only a pinky toe - you might get your balance back" or "That tumor is pretty small..."

I'd like to agree with you that a slower approach might work, but I just don't think it will. We've already been talking about it for a hundred years in this country. We need sweeping reform - and a little more charity all around.

I heard on the news last night that Harvard lost some percentage of their endowment that totaled 11 billion. Obama's plan will cost 9 billion over ten years and will help a whole lot more people than Harvard. When Harvard can lose that much and still function pretty dang well, I think we can find the money in this country to make sure that people can see a doctor when they are sick without the fear of going bankrupt - which I have personally experienced and I am a highly educated person who has been fully employed my whole life.

3. goxewu - September 11, 2009 at 08:35 am

The comparison between "mandatory" health insurance and "mandatory" auto insurance doesn't hold all the way down to the fine print. No comparison between X and Y does; otherwise X and Y wouldn't be different things in the first place.

But the basic principle of the two are quite similar: "Mandatory" auto insurance says that it is in the interests of both society as a whole and drivers with good driving records who can afford to pay retail for auto insurance to subsidize those whose could not otherwise afford or get auto insurance. Why? Because we all drive on the same roads, and uninsured drivers are an economic danger to everyone (i.e., you get into a accident with one and you're either on your own in terms of recovering damages or you've paid a lot more in your own insurance for six-figure uninsured motorist coverage.) The same with health insurance: society as a whole and the majority with health cannot afford tens of millions of uninsured people who avoid the doctor, get more seriously ill than they'd have to with insurance, or get sick and lose their jobs, homes and businesses because of it.

What the-free-market-solves-anything conservatives don't understand is that in the 21st century, a totally interconnected industrialized Western democracy is hardly off-road. We're all on the same highway system and it's best that, metaphorically speaking, we subsidize auto/health insurance for everyone.

4. ledzep - September 11, 2009 at 03:51 pm

The point that's most helpful in this piece is this: health insurance is unlike other forms of insurance in that we expect it to cover all forms of health care, no matter how expected or unexpected. In that respect the relevant comparison is not auto insurance, but the kind of gold-plated warranty and repair plan that accompanies a luxury car. The point is not that everybody with insurance actually gets gold-plated coverage, but that insurance policies cover routine as well as catastrophic care. As has been pointed out by countless health care analysts (and done particularly well by David Goldhill in his recent Atlantic essay), the incentives set in place by using health insurance to cover all health care are incredibly harmful, and are a major, if not the major factor in driving up costs. Basically, patients are, at the level of individual events, always spending someone else's money on health care, even health care that's routine or more-or-less predictable. (In reality we all pay the costs, but not when we're getting the care.) That dynamic would be better restricted to truly unpredictable or catastrophic care. The difficulty is that defining catastrophic care will be complicated by the efforts of every provider- and insurer-lobby group to get their type of care included as part of mandatory coverage.

As to the idea that we should mandate health insurance because otherwise other people will have to pay for the uninsured, this should really only come into play for catastrophic-type care. Under the present system, all care for the uninsured is wildly expensive (for society) because it usually takes place in emergency rooms, whether or not that would be the appropriate place to go. If we paid for health care out of pocket (or out of a mandatory HSA, supplemented by the gov on a need basis - which is part of Goldhill's proposal) then the uninsured wouldn't have to cost society zillions for relatively small health issues. Mandated catastrophic insurance could kick in for major things.

The bottom line is that the comparison to auto insurance really brings out the features of our system that make health care so expensive here relative to other places. And mandating coverage (along with community rating, no pre-existing condition exclusions, etc.) can get more people insured, which is great, but if it just exacerbates the cost exploding tendencies, the bad effects might outweigh the good.

5. 69trout - September 16, 2009 at 09:56 am

Does anyone have any thoughts on the differences or similarities between mandating children be educated (even if home schooled) versus mandating that children have health coverage?

6. 69trout - September 16, 2009 at 09:56 am

Does anyone have any thoughts on the differences or similarities between mandating children be educated (even if home schooled) versus mandating that children have health coverage?

7. 69trout - September 16, 2009 at 09:56 am

Does anyone have any thoughts on the differences or similarities between mandating children be educated (even if home schooled) versus mandating that children have health coverage?

8. stop_think_decide - September 17, 2009 at 01:21 am

Let's be clear, any sort of mandatory auto insurance exists to cover any liability the motorist might inflict on others and is only required for those who CHOOSE to operate a vehicle on public property. It is not mandatory in any other sense. Would the people who use this silly comparison support the enforcement of ACTUAL mandatory auto insurance, i.e. forcing everyone to pay for auto insurance whether or not they even own or operate a car? whether or not they are even capable of driving? even if they are too young now to drive because they might need it in the future? I doubt it.