Should Individuals Be Required to Purchase Health Insurance?

Posted by David Edman in Blog, December 2011, Healthcare Reform, Healthcare Reform Blog, Monthly Archives on December 14th, 2011 | No Comments »

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The question of whether, and how, to fix our health care system remains central to our national public policy debate.  The Patient Protection and Affordable Care Act (PPACA) was passed in 2010 in order to fix the system’s deficiencies.  One of the law’s most controversial provisions, and the basis for a challenge to its constitutionality, is a mandate to purchase health insurance.  There are many factors which contribute to the anticipated failure of PPACA to reduce costs and fix what ails our healthcare system, but is the individual mandate one of those factors?  This discussion addresses the rationale, and the legality, of the individual mandate.

The Constitution

The 10^th Amendment to the Constitution of the United States says the following:

“The powers not delegated to the United States by the Constitution, or prohibited by it to the states, are reserved to the states respectively, or to the people”.

The purpose of this provision is to enshrine into our society the concept that power resides with ‘we the people’.  Our federal government has only limited powers to impose its will on all people in the 50 United States.  Clearly, there must be rules that govern how we live together.  How do 50 separate states function together, properly balanced by individual freedoms to choose how we wish to live our lives?  Therein lies the purpose of the 10^th Amendment.

Creating Rules For A Civil Society

In the absence of rules, there would be chaos, which regrettably prevails in far too many places around the world.  We are lucky to live in a civil society called the United States of America, where we maintain our individual freedoms but accede to certain basic requirements such as:

• Stopping at a red light (both as pedestrians and drivers)
• Purchasing of insurance if you choose to drive a car
• Paying taxes

We could not function as a society without rules, but how are the rules made and by whom?  The answer lies in the genius of our Founders, who established the Constitution as the basis for rulemaking in this country, with a balance of powers between the executive, legislative, and judicial branches of government.

How Does This Apply To Healthcare Services and the Purchase of Health Insurance?

We now return to the fundamental question….can and should an individual be required to purchase health insurance?  Most people would agree that in a civil society, people who have heart attacks should not be left on the street to die.  But it is more complicated than that, including:

• How does the patient reach a hospital?
• Who is responsible for treatment?
• Who pays for the patient’s care?

These questions all have to be answered, starting with do we take care of the heart attack victim lying in the street.   The 10^th Amendment tells us that the answers must come from the states and/or the people, but generally not from the federal government.

So, does it EVER make sense to require every individual to purchase a health insurance policy?  Insurance is based on the “law of large numbers”, and it is a fact that an individual mandate will create a larger, more stable risk pool.  A larger risk pool is likely to have a mixture of good risks and bad risks, greater predictability of loss and financial stability, and lower cost of risk.  A state legislature must weigh the benefits of an individual mandate against the perceived ‘negatives’ associated with requiring specific action(s) on the part of all of its citizens.

I conclude that the individual mandate is one, but not the only, valid approach to establishing a large risk pool which is essential to creating stable prices for health insurance.  And, it is perfectly appropriate, and legal, if it is so determined at the state level.

Is The Individual Mandate Reasonable (EVEN FOR CONSERVATIVES)?

YES, if it is the decision of a state government, and not a requirement of the federal government.  If you pay taxes, buy car insurance, and stop at red lights, you should have no problem with a requirement to purchase private health insurance IF that is the decision of your state government.  It’s that simple, consistent with the 10^th Amendment.

So, let’s see an end to all the bickering about the individual mandate.  It is consistent with states’ rights and conservative principles when done at the state level, as in Massachusetts.  At the same time, it is arguably unconstitutional when imposed on all 50 states, as in PPACA.  If conservatives want to “repeal and replace” ObamaCare, let’s start with the fact that 50 state experiments are an appropriate and legal way to fix our healthcare system, some of which may even include an individual mandate.