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Why Should We Force Americans to Buy Health Care Insurance?

At a July press conference, President Obama claimed
"the average American family is paying thousands of dollars in hidden costs"
because uncompensated health care for the uninsured drives up the price of
medical coverage. In an interview
with ABC's George Stephanopoulos on Sunday, by contrast, he said uncompensated
care costs the average family $900.

According to a 2008 report from the Henry J.
Kaiser Family Foundation, both of those estimates are way off. The foundation's
analysis indicates that the true annual cost per family is more like $200, with
uncompensated care accounting for "less than one percent of private health
insurance costs."

These numbers are important because the president's main justification for
requiring every American to buy health insurance, a central element of his
reform plan, is that uninsured people unfairly impose costs on their fellow
citizens. That rationale not only has a weak empirical basis; it conceals the
real motivation for the individual insurance mandate while dodging moral and
constitutional questions about it.

During the presidential campaign, Obama castigated his
Democratic rival, Hillary Clinton, for saying the federal government should
force everyone to buy health insurance. Five months into his presidency,
however, Obama said he
supported "making every American responsible for having health insurance
coverage." In a speech
this month, he argued that "the young and the healthy" cannot be permitted to
"take the risk and go without coverage" because "such irresponsible behavior
costs all the rest of us money," since "we pay for these people's expensive
emergency room visits."

The problem with this argument is not just that the cost of such
uncompensated care seems to be much lower than the president claims. It's also
his assumption that everyone who goes without insurance is a freeloader.

What about the young and healthy (or middle-aged and wealthy) person who
decides insurance is not worth his money but pays all his medical expenses out
of his own pocket? His choice does not impose costs on anyone, but under Obama's
plan he would still be punished for it.

The real reason Obama insists upon making the young and healthy buy insurance
they don't want is not the relatively minor free rider problem but the
potentially ruinous adverse selection problem: The most expensive patients are
the ones who are most likely to sign up for coverage. To keep the official
10-year price tag of his plan below that magical $1 trillion threshold, he needs
to balance sick people who rack up big bills with healthy people who pay for
insurance but don't use it. Instead of acknowledging this reality, Obama
portrays the healthy uninsured as irresponsible leeches.

Even if Obama could make a plausible moral argument for the unprecedented
step of demanding that all Americans buy insurance—not in exchange for a
particular privilege, such as driving on public roads, but simply by virtue of
being alive—he would be hard pressed to cite the constitutional authority
for such a mandate. The regulation of interstate commerce is the usual
justification for federal intervention in the economy, but the decision to
refrain from buying insurance is neither interstate nor commerce.

Obama might be on firmer ground if he portrayed the levy imposed on people
who decline to buy insurance as an exercise of the congressional tax power. But
he does not want to admit he is forsaking his campaign promise
to refrain from raising taxes on households earning less than $250,000 a year.
That's why, in his interview with Stephanopoulos, he insisted that the "excise
tax" imposed
on the uninsured by the Senate health care bill he supports is not really a tax.

How so? After Obama signed a bill raising the federal cigarette tax, his
press secretary explained
that the tax pledge was still intact because "people make a decision to
smoke."Likewise, Obama might argue, people make a
decision not to buy health insurance. The lesson is clear: If you don't want to
pay higher taxes, don't make any decisions.


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