The Argument for an Individual Mandate

If we want insurers to cover people with pre-existing conditions -- without penalizing them for being sick by charging them sky-high premiums -- then we must require that everyone have insurance.

Otherwise, many would wait until they were sick before applying, secure in the knowledge that when they needed it, insurers would have to provide it without charging them more. As a result, the rest of us would have to pay higher premiums to fund insurance for these "free riders."

How would we enforce the mandate? A study by the Urban Institute, published in the most recent New England Journal of Medicine points to "enforcement through the tax system" as "the most efficient approach" to enforce a mandate: "We believe that those who do not enroll in a qualified plan should receive care when it is sought (as if they were enrolled), but should then have to pay back-premiums for the calendar year, plus a penalty, possibly as much as 25 percent."

This strikes me as a reasonable proposal. Others have suggested that everyone should have to show proof of continuous health insurance when applying for an automobile license or registering a car. (Government subsidies would be available for those who cannot afford the premiums.)

Insurance is based on the idea of pooling risk. No one knows who might suddenly become sick or involved in an accident. That is why we need a mandate: everyone in, no one out.

President Obama would allow the uninsured to choose between a public sector option (Medicare E-for everyone) and private insurance. We know that two-thirds of the uninsured have incomes below 200 percent of the federal poverty level and that, thanks to the stress of being poor -- plus environmental factors -- low-income people are more likely to suffer from chronic diseases.

Today, private insurers try to avoid poorer, sicker patients. Under the mandate, the authors of the NEJM article observe, private insurers would have "an incentive to explore ways to provide more effective, efficient care to people with serious medical needs."

By Maggie Mahar  |  July 8, 2009; 2:47 PM ET  | Category:  Insurance
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