Congressional Health Care Briefing Book |
Coverage Without Mandates
"If everyone who buys insurance receives a tax subsidy, those who go uninsured will pay higher taxes."
"The extra taxes paid by the uninsured are roughly equal to the free health care they receive." |
A common assumption in the current health care debate is that universal health insurance coverage requires an employer or individual mandate. Either directly or indirectly, these mandates would require individuals to obtain health insurance, whether they want to or not.
An Alternative to Mandates. Fortunately, there is a better way. Government can make health insurance affordable for every family through a system of tax credits. Under this system, people who choose to be uninsured would pay higher taxes, and those revenues could be used to fund a social safety net. Uninsured people would be entitled to obtain medical care regardless of financial means -- although they probably would not have access to every doctor and hospital. Moreover, when they obtained medical care, the voluntarily uninsured would be payers of first resort, relying on the safety net only after exhausting their own resources.
The Tax Penalty for Being Uninsured. Even under the current system, people who are uninsured pay a penalty because they do not receive the tax benefits available to those who have employer-provided insurance. Moreover, the extra taxes they pay may equal or exceed the amount of free care uninsured people receive from hospitals each year.
How Much Free Care Do the Uninsured Receive? The Congressional Budget Office (CBO) estimates that the uninsured received about $15.2 billion in "uncompensated" hospital care in 1991, and another $10.2 billion in "uncompensated" physician services. After making some adjustments, the CBO estimates that the uninsured caused $20.3 billion in costs to be shifted to paying patients. By 1995, that figure is expected to grow to $27.6 billion -- an amount equal to about $1,645 per uninsured household. Far from getting a free lunch, the uninsured pay a penalty for being uninsured, equal to more than two-thirds of the value of uncompensated care they receive each year. In fact, given the uncertainty about the amount of uncompensated care, uninsured people are arguably paying their own way. Creating a Social Safety Net. The problem with the current system is that most of the extra taxes the uninsured pay go to Washington, D.C., while the uncompensated care they receive is provided by local hospitals and physicians. The solution to this problem is to establish a formal link by which the extra taxes the voluntarily uninsured pay are returned to the local hospitals and clinics that deliver unreimbursed care. |