NCPA - National Center for Policy Analysis


January 16, 2007

Forcing people to buy health insurance will not solve the problem of the uninsured, make America healthier or decrease the amount of money we spend on health care.  Such schemes will increase taxes, kill jobs and destroy private health care markets, says Sally C. Pipes, president and CEO of the Pacific Research Institute.

Politicians justify these plans by alleging unfair cost shifts from the uninsured to the insured.  Yet these plans rely on massive cost shifts, says Pipes:

  • In Massachusetts, federal taxpayer money will be shifted to providers.
  • In California, the governor calls for an increase in rates for providers from government insurance and then taxes some of this back with new taxes on physicians and hospitals.

Further, schemes based on individual mandates will require new and extreme regulation of the private insurance market -- which will only lead to higher costs, says Pipes.  For example:

  • In California, insurers won't be able to turn down anyone based on health status or age, a policy that causes premiums to skyrocket.
  • In 1993, premiums jumped 500 percent when New Jersey passed a similar regulation.
  • In Massachusetts, premiums for the subsidized plans are set as high as 6 percent of the insured's income.

Overall, many Americans support universal coverage, but not if it entails any restrictions or costs more, says Pipes.  Gov. Schwarzenegger and company better hope that these sentiments don't apply to California, because the move to universal coverage not only costs more, but will only come from mandates and will arrive with plenty of restrictions.

Source: Sally C. Pipes, "Both plans go too far. Government meddling can't fix this," USA Today, January 16, 2007.

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