Massachusetts' False Insurance Analogy
The Massachusetts Legislature has passed a bill that would make health insurance compulsory in that state:
Gov. Mitt Romney (R) supports the proposal, which would require all uninsured adults in the state to purchase some kind of insurance policy by July 1, 2007, or face a fine.
…
Romney said the bill, modeled on the state’s policy of requiring auto insurance, is intended to end an era in which 550,000 people go without insurance and their hospital and doctor visits are paid for in part with public funds. “We insist that everybody who drives a car has insurance,” Romney said in an interview. “And cars are a lot less expensive than people.”
This is, of course, utter nonsense.
The states that require auto insurance require liability insurance, in case you harm others. Health insurance by definition is to provide coverage for yourself. Health insurance and auto insurance are actually polar opposites.
The proper analogy to the Massachusetts proposal is not liability insurance, but collision insurance — which, to the best of my knowledge, no state requires. If you want to take your chances with your vehicle, then that’s your choice. Why should the government force you to do otherwise? What’s not your choice is taking chances with my vehicle if you collide with it. You are required to have insurance to protect me, not yourself. (So-called “no-fault” insurance doesn’t change the underlying analytical framework either — the point of auto insurance is to reimburse for damage you cause to others, even in a no-fault regime.)
So should it be with health insurance. Insurance for your body should be strictly voluntary, just like collision insurance is for your vehicle.
The externalities you impose on me by crashing into my car are your own doing. The externalities the government creates by the current swamp of publicly-subsidized health care is the government’s own doing — exactly the opposite of the auto insurance paradigm. And now the Massachusetts government is “coming to the rescue” by making people pay through premiums for what they’re already paying for through taxes, to correct a gap that the government itself created? This is somehow a noble, efficient or brilliant central-planner solution? Why doesn’t the Massachusetts Legislature simply outlaw diseases and be done with it?
Any legitimate attempt at health care finance reform has to start at the beginning — the perverse practice of giving favorable tax treatment for health expenditures to employers rather than to employees. Get employers out of the health care benefits business altogether, raise worker pay by the value of the benefits now provided, make all healthcare expenditures — whether directly to providers or indirectly to insurance companies — tax deductible or perhaps even tax exempt. And then have health insurers start directly competing for policyholder dollars (rather than competing indirectly for employer dollars). That last point is, perhaps ironically, the real way that health insurance should be “just like auto insurance.”
More thoughts from Coyote Blog, Rolling Doughnut, Below the Beltway, Marginal Revolution.
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Ah, but your BANK can require you to carry collision coverage, to protect the collateral they have an interest in.
If you fall out of a tree and break your leg, and are rushed to a hospital which cannot turn you away under the code of medical ethics due to inabilty to pay – and your medical bills are covered by the Uncompensated Care Poolwhich must be funded by the taxpayers – doesn't THAT give me a collateral interest which would make you liable to purchase insurance?
[Kip replies: The bank didn't force you to buy the car and then require you to insure it.]
Peter,
The question here regarding your example is whether the new law in Massachusetts changes anything about taxpayer liabilities/government regulation of health care. It doesn't. It just adds more beauracracy and statist garbage.
I agree with Kip that removing employers from the health care decision is the way to go. This new law does the exact opposite. As a small-business owner, with no other employees, would I get hit with the $295 penalty for not offering myself health insurance? I get it cheaper than if I purchased it through my business. I'd probably qualify for the waiver, but I'd still go through all of the extra paperwork, not to mention the loss of privacy in having to provide the government with my health insurance information. It's a short leap from health insurance info to health info. Mayor Bloomberg is doing a great job of proving that.
1. Health risk is not merely an individual issue. As a society we feel compassion for our citizens who are suffering and require health care providers (mostly emergency rooms) to provide care regardless of payment. It is appropriate for government to take an interest in this issue. A 'health risk pool' is one way do it.
2. Massachusetts is brave to address the issue (and maybe foolhardy). The proposal (as I understand it) seems cumbersome and convoluted. I wish them the best and hope others will come up with even better ideas!
3. Making health insurers start directly competing for policyholder dollars doesn't make sense to me. How am I to know if 40 MG of Lipitor (a non-generic and more expensive drug) better than some generic (and cheaper) anti-cholesteral medication? How can I tell if one hernia surgeon is better than another? We don't have good information, and, as non-medical experts, we lack the ability to evaluate the information we have. Some medical care/medicine/treatment is commodity-like, and some isn't. I suggest free health care clinics for the routine parts and more hard thinking about the rest.