Mandatory Savings? - Reason Magazine - The Diigo Meta page

• 05 Nov 09
  

  Eric Hanneken

  health insurance mandate Massachusetts government politics Jacob Sullum

  • What industry
    wouldn’t welcome a law that forces everyone to buy its product?
     But the insurers also argue that a mandate will help
    control costs, and the president agrees. Judging from the
    experience in Massachusetts, which imposed its own insurance
    requirement in 2006, they’re both wrong.
  • There are several reasons why mandatory insurance, contrary to
    Obama’s promises, has been accompanied by rapidly escalating
    costs. First, when you subsidize something, people tend to
    consume more of it.
  • 2 more annotations...
  • • Second, despite stricter penalties, Massachusetts seems to be
      experiencing adverse selection. Tanner notes that, while the
      share of residents without insurance has shrunk from about 10
      percent to about 5 percent, the proportion of uninsured people in
      the 18-to-25 age group has increased from 30 percent to 35
      percent, indicating that “the young (and presumably more healthy)
      are less likely to comply with the mandate.”
    • Third, requiring people to buy insurance entails defining the
      minimum level of coverage, which necessarily makes insurance more
      expensive than it would otherwise be. In effect, the government
      prohibits the cheapest insurance plans, the ones with the highest
      deductibles and the least generous benefits.

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