Auto insurance does not equal health insurance

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What’s wrong with a government mandate for health insurance? After all, government mandates auto insurance, right? In any basic conversation about health care — especially in MA where the idea of a mandate started — that is a basic line of argument from pro-mandate folks. My problems with that line of argument are three:

1. The federal government does not mandate auto insurance, and it should not mandate health insurance. (In fact, three states do not have auto insurance mandates.) The point is, states can choose to or not to.

I have no problem with the health mandate in Massachusetts – if the system that is scaffolded on top of it works. States constitutionally have the power to mandate such things, and Pioneer is trying to make the law work here, if it is possible (and empirically speaking, it may not be workable – fact is, we do not know). If other states see what is going on here and adopt something similar, great. If they choose reforms diametrically opposed in structure to a bureaucratic exchange and a mandate, even better, so we can compare the results of our experiment to those in other states.

The problem is that the new federal legislation takes what are state decisions and federalizes them — both a constitutional and a “quality of government” problem for me. The feds are simply not good at delivering local services. That’s why we set up our current local-state-federal governmental system.

2. When we say health mandate, what do we mean? And is the federal mandate at all like the auto insurance mandates currently in place in 47 states? The various state mandates for auto insurance, as far as I know, require coverage for damages to others’ property or persons. The auto mandates do not require insurance for prevention, ongoing care and maintenance, or even your own vehicle. In Washington state, for example, my colleague Bob Williams notes that

The requirement is to have an insurance liability policy or a certificate of deposit or a liability bond. Naturally, government excludes “publicly-owned vehicles.”

3. Coverage for all, through state auto mandates, is never achieved. Another colleague, David Racer, notes that

Even though 47 states mandate auto insurance coverage, the average uninsured rate, according to the Congressional Budget Office, is 14.6 percent.

The uninsurance rate in our mostly voluntary health insurance system has held steady at about 15.5 percent or so for a decade. The point is that Massachusetts started out seeking near-universal insurance from a unique place — the low single digits. In much of the rest of the country, the federal government is going to try and take us from mid-teens or higher to universal coverage.

That’s hubris unless you spend trillions, because there is no real cost-containment in the federal bill.