The ‘individual mandate’ is a provision of healthcare reform that makes it mandatory to have a health insurance. The objective of this mandate is to remove free riders into the healthcare system in the state. In this paper, we are going to analyze how effective this mandate is going to be in solving the problems in the health insurance sector.
In the first place the question that arises is that whether a free rider is a major factor responsible for the rising cost of health care. In this respect we should stress the fact that even insured people take the benefit of uncompensated healthcare and uninsured people pay for a substantial amount of services from their pocket . Thus, removal of free riders cannot be a justification for the mandate.
Secondly, even making health insurance mandatory will not lead to complete compliance to the mandate. This is because one major cause of people remaining uninsured is the cost of insurance. The issue should actually address the problem of affordability.
Another problem that the mandate faces is specifying the dimensions of the ‘minimum benefits package’. If more services are included in it the package will grow along with the premiums. It is very difficult to identify the basic healthcare services.
The determination of payouts and deductibles is another problem attached to this mandate. The healthcare service providers would prefer low deductibles which in turn will adversely affect the flexibility of choosing different health plans.
Lastly, the mandate requires community rating, which implies that the payment will be same for everyone irrespective of the potential health risks. Thus the low risk patients will prefer not to have an insurance, even if they do, the system will lead to subsidization of the high risk patients by the low risk patients.
References
Whitman, G. (2007). Hazards of the Individual Health Care Mandate. Cato Institute.
