Tuesday, October 24, 2006

Should Health Insurance be Required?

Should health insurance be required? While I am generally free-market oriented, I think that there's a strong case that could be made for requiring health insurance, a la Mitt Romney's plan in Massachusetts.

When someone is brought to an emergency room, he or she must be treated, and the payment issues are worked out later. This is a good thing, because many people that are brought to the emergency room are rather incapacitated, and may not even be able to tell you their name, much less their insurance policy number. Furthermore, it would seem odd to reject someone who is having an acute emergency because they didn't have insurance. I mean, even the most die-hard free marketeer probably wouldn't advocate the end to this rule.

Some people claim that forcing people to buy insurance is a personal responsibility issue: let them take the risks. However, because hospitals have to accept all emergency room patients, who exactly ends up taking the risk? True, the operation may cost thousands of dollars, which would have been covered by a policy that cost a few hundred per year, but if the operation is so expensive that someone couldn't pay it, the hospital is essentially still out the money. There's always going to be a free rider problem for those who could have afforded insurance, but who can't afford the actual treatment (and don't have sufficient assets). These people will declare bankruptcy. I would imagine that many single 20-something males fall into this category.

I would hope that any obligatory insurance plan required by the state would allow individuals to purchase various plans that would have different levels of coverage, as long as they all had emergency coverage. Furthermore, the insurance companies should be allowed to price these policies as they see fit, using whatever risk factors they deem appropriate (e.g., they could charge identical twins different rates if one smoked and the other didn't).

However, forcing basic emergency coverage for all those who can afford it seems entirely reasonable to me. Why should the hospitals have to take the risk?

1 comment:

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