Whether or not the US should enact an individual health insurance mandate has been a reoccurring theme over the last year and a half and the idea has sparked new discussion this week as the House and Senate bills released last week put the burden on employers to offer insurance or pay a fine.
The idea makes a certain amount of sense, at least in the abstract. Getting everyone in the pool distributes the risk more evenly, especially since a significant portion of the currently uninsured are the young and healthy. But many American commentators have criticized the idea. As usual, my approach is to take a look at countries that already have mandates, and which have systems that make them comparable to the US, in this case Germany, Switzerland, and the Netherlands.
German news reported last week that some 45,000 Germans still lack health coverage down from 211,000 at the start of 2007 before insurance became compulsory. In a country of more than 82 million, this is a miniscule percentage but it does remain far above the only 6,000 who were uninsured in 1995 – when there was no mandate.
Some people do slip through the cracks, however. Back in April, the German newsmagazine Der Spiegel interviewed Kornelius C., who is self-employed and doesn’t have health insurance. He wouldn’t give his last name lest he be found out and fined. For Mr. C “[t]he premium lies at 540 Euros a month…He says that even with the best will he cannot find this sum.”
Switzerland also has near 100 percent cover with less than half a percent of the population uncovered. But that doesn’t mean that everyone pays what they owe. In early 2006, in response to an ongoing problem, a regulation went into force that allowed insurers to not pay for care for those who were behind on their payments. By the end of that year, 150,000 people in Switzerland, or nearly 2 percent of the population, had services withdrawn because they had not fully paid their premiums.
Although 5 out of 26 cantons worked out plans to cover the unpaid sums, this still left around 90,000 Swiss out in the cold. Around 300 to 400 million Swiss francs in unpaid premiums are outstanding and more and more people in Switzerland are falling into the category of “bad payers” as the cost of insurance goes up.
A similar situation exists in the Netherlands where the percentage of people who are uninsured is a bit higher, about 1.5 to 2 percent. Add to this, however, the around 240,000 people who in 2007 had failed to pay their premiums for at least half a year, or another approximately 1.4 percent. As a result, the Dutch newspaper de Volkskrant reported that “insurers fear the revolving door insured” whose health coverage appears and disappears with their ability to pay or who move from insurance company to insurance company and the government has become stricter about tracking down and punishing non-payers.
Some may quibble that it isn’t universal coverage if even one person is uninsured but they won’t find any sympathy here or with the many Americans would be very pleased if the US could reduce the percentage of uninsured to the 3-3.5 percent found in the Netherlands (if you add those who do not pay consistently to those have no coverage at all), let alone the less than one percent in Germany or Switzerland. More concerning, are the significant numbers who are nominally insured but cannot or will not pay their premiums, stiffing insurance companies and leaving patients without access to care.
Theoretically, the US could manage to post numbers that look like the Netherlands, if not Germany, since some estimates of the number of the ‘true’ uninsured in the US right now is about 3 percent of the population (once you’ve excluded illegal immigrants, those who are unwilling to allocate the resources to buying coverage or those who have not signed up for federal or programs for which they are eligible). Further, Massachusetts has managed to reduce the uninsured to around 2.6 percent of the population.
But, as many have pointed out, large numbers of Americans don’t have auto insurance, which is already mandated by law. In fact, the Insurance Research Council reports that next year may see 1 in 6 drivers in the US without car insurance. While this reflects the strains of the present economic crisis, the percentage has always been fairly large, 13.8 nationwide in 2007 despite years of decline or not much less than the percentage without health insurance. Further, the range is broad, from 29 percent in New Mexico and 28 percent in Mississippi to 1 percent in Massachusetts and 4 percent in Maine in 2007.
Switzerland, on the other hand, has the same level of compliance with its mandate requiring car insurance that it does for that on health care. And notice that Massachusetts had the lowest percentage without auto insurance, so their success in getting people to obtain health coverage shouldn’t be used to predict what would happen nationwide if a mandate was enacted.
There are plenty of reasons why mandating health insurance isn’t a good idea, but perhaps the biggest is that, international precedents aside, it probably just won’t work.
