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Health insurance mandates won't help uninsured

Originally published in the Baltimore Examiner

By Marc Kilmer
Published on Wednesday, January 31, 2007
OP-EDS

BALTIMORE - With the opening of a new session of the General Assembly, we can be assured of action that will address the issue of those who lack health insurance in Maryland.

One proposal that has fans from all sides of the political spectrum mandates health insurance for everyone in the state. Unfortunately, this popular proposal is a poor cure for our state’s health insurance ills.

The path for this type of plan has already been blazed in Massachusetts, where former Gov. Mitt Romney pushed though a health insurance plan that imposes a number of mandates on individuals and businesses as well as provides subsidies for those who cannot afford insurance.

It was popular with both Democrats and Republicans and is now being implemented.

Massachusetts plans to use the funds otherwise going to pay the bills of the uninsured to provide these individuals with financial assistance and access to insurance. This will be accomplished by individual mandate, where uninsured residents will lose personal exemptions on their state tax returns; by employer mandate and risk of a fine; and subsidies for residents whose income is below 300 percent of the federal poverty level.

Other states, including Maryland, are beginning to follow suit with proposals. California Gov. Arnold Schwarzenegger is pushing it in his state, and the Maryland Health Care Commission has endorsed aspects of it for ours.

While this plan is popular and looks attractive on the surface, Maryland policy-makers should be wary of those who say it will solve the problems of the uninsured.

People who lack health insurance do so for many reasons, and simply mandating they have this insurance does not adequately address their reasons for not having it. Although 16 percent of Marylanders do not have health insurance, this group is quite varied.

For example, 61 percent who lack insurance have incomes above the federal poverty level.

Forty percent of them have income at least twice the federal poverty level. These are people who could probably afford insurance if they wanted.

Those who have enough money but choose not to spend it on health insurance suggest that the health insurance offered in Maryland is not worth the price.

A large part of the blame for this situation goes to our General Assembly, which has been busy piling mandates on health insurance companies, driving up the price of insurance policies. This pattern also causes health insurance companies to leave the state, giving consumers fewer choices.

And now instead of targeting insurance companies, those who support this plan want the General Assembly to target Maryland residents.

The mandate that every Marylander must have health insurance will involve a massive expansion of government power over the lives of everyone in the state but will likely do little to actually reduce the uninsured rate.

Simply put, it will be nearly impossible to verify that everyone who says he is covered actually has insurance.

This problem can easily be seen when one considers just how many uninsured drivers are on the road. The state mandates car insurance, but a significant portion of the population simply ignores these mandates.

The state has few resources to enforce this mandate outside of an accident or traffic stop that requires police involvement. A health insurance mandate will be no easier to enforce.

Instead of expanding government meddling in the health insurance market, the General Assembly should be looking for ways to undo the damage it has already done. Its mandates and restrictions are the reasons many people do not have insurance.

The assembly should focus on fixing the problems it has created before it makes new problems for consumers.

Besides reducing its mandates, the best thing the General Assembly could do is allow Marylanders to purchase insurance policies from companies in other states. Unlike most other products, health insurance consumers cannot purchase policies from outside the state.

This means that there is no real health insurance market within Maryland. Also, the few companies that do operate here are burdened with state mandates that make insurance unaffordable for many.

Giving consumers a choice would be a much more effective way to help people obtain health insurance.

The General Assembly should let Massachusetts and California experiment with more government involvement in health care.

Government regulations have created enough problems in Maryland’s health insurance market. It’s time to try something different here.

Marc Kilmer is senior fellow at The Maryland Public Policy Institute.

Examiner