The Health Insurance Mandate Troublesome to Families

With health care becoming a controversial and debated topic in Congress, there is definitely curiosity among small business owners and families throughout America about how the health insurance mandates, which are included in the House version of this bill, will impact their well being.  This weekend, in the New York Times, there were two articles that focused on the impact that the insurance mandate will have both on Americans and small businesses, and one of those articles was written by George Mason University Economist Tyler Cowen. So, how will this mandate impact families and businesses?

According to the article by Cowen, the health insurance mandates could actually place detrimental economic impact on families by costing the average family $14,000 more per year in insurance costs. However, Cowen mentioned that along with the rising costs, there are also funding mandates included for programs, such as acupuncture, alcohol treatment, fertility services, and chiropractor services. Cowen looks at how these mandates have worked in the Netherlands and Switzerland.

There are now about 1,500 insurance mandates among the various states, and hundreds of others are under consideration. The dynamic at work here is that the affected groups have a big incentive to push for mandates, while most other people are unaware of the specific issues and don’t become involved.

Because mandates don’t stay modest for long, health insurance would become all the more expensive. The Obama administration’s cost estimates haven’t considered these longer-run “political economy” issues.

IF there is a problem with mandates, why do they seem to work in countries like Switzerland and the Netherlands? One answer is that mandates are more effective when health care cost inflation is under control, and both of those countries fare better at technocracy than the larger, less tightly ordered United States.

And mandates also fare better in those nations because of their greater equality of incomes. In other words, it’s less of a stretch to offer poorer people coverage that is roughly comparable to that of the wealthy.

If anything, however, European mandates will face growing problems, as health care cost inflation is spreading globally.

The other article addressed how the health care proposals will impact small businesses. Currently, small businesses are forced to pay almost 160 percent more in premiums to insure themselves and their employees. With the health care proposals in Congress, they will be forced to cover their employees, which will continue to drive costs up and hurt these businesses.

Small businesses, besides having less negotiating leverage than big employers, tend to pay more for the same coverage because they cannot spread the cost of expensive medical conditions or hospitalizations over large numbers of workers. Premiums can be especially high if they have sick or older workers.

Owners of small companies say the lack of options is why they have been paying increasingly higher premiums for less and less coverage — this year perhaps more than ever.

Health care coverage should be accessible to both families and small businesses, but it should be done by allowing these groups to have access to insurance companies from all over the country and decide whether these plans will be provide similar quality to their existing coverage at lower premiums. By forcing business and families under a government run program, you will inhibit choice and cause further economic detriment.