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Zack Cooper

Zack Cooper

Posted: October 20, 2009 07:05 AM

A Health Insurance Mandate and Corporate Monopoly

What's Your Reaction?

Requiring every American to own health insurance is tough medicine. A mandate to own health insurance can feel like a tax; it can be characterized as government overreach, and unless the subsidies are generous enough, it will feel like health care reform is putting the hammer to the middle class. And depending on which poll you look at, 50% to 70% of Americans oppose a mandate.

Nevertheless, a mandate is the key to creating successful health care reform. Without a mandate for every American to have health insurance, health care reform will fail. Ultimately, the polling data on a mandate doesn't matter; international experience tells us that people will warm to a mandate over time and will certainly not oppose it once they feel the positive impact it has on all of our health insurance coverage.

Here's why...

Right now, there are two ways for insurance companies to make money. They can improve the health of those they insure or they can invest their time and money trying to exclude the sick or the likely to be sick from buying coverage. In our current health system, it is far more profitable for insurance companies to focus on denying care, rather than improving the health of those they insure.

This is the opposite of every other country in the developed world. At the moment, the incentives in the US health system are for sickness care, not health promotion. Most American doctors get higher pay for delivering more care, not necessarily for providing better medicine. Likewise, insurance companies get rewarded for excluding those who might fall ill, rather than helping to improve the health of those that they already insure. And as long we keep these backwards, ill-conceived incentives in place, health care in the US will cost far more than it does any where else in the world and will continue to have patchy quality.

The only way to go from sickness care to health promotion is with both tougher regulation of insurance companies and a meaningful mandate for individuals to buy health insurance. If we require every American to have health insurance and we say that insurance companies can't make money by avoiding sick patients, the insurance companies will only survive if they focus on getting their insurees healthy and developing innovative ways to keep them that way. Those are the type of incentives we need for success.

Part of the political problem with a mandate is that it is precisely what the insurance industry wants. To many Democrats, this makes a mandate feel like a simple giveaway to the insurance industry with no quid pro quo. And, in light of the release of the blatantly self-serving and obstructionist report from the insurance industry's lobbying arm, the America's Health Insurance Plans, it's hard to blame anyone for feeling that way. But, this isn't the whole story. Turning a blind eye to a mandate as a form of revenge would be cutting of our nose to spite our face.

We usually think of the Republicans as the party of industry competition. However, over time, Republicans have morphed into the party of monopoly and their brand of monopoly is trouble. Their brand of monopoly enables insurance companies to be shielded from competition and exempted from having to step up their game to meet customers' needs. This has hurt us all. Private companies operating in monopoly markets are bad for the American public.

Think about it for a moment...we have about a sixth of our economy in a market that has no competition and zero pressure to slow spending.

That's where competition comes in. In addition to requiring everyone to buy insurance, we need to make the health insurance market more competitive. That competitive pressure is what's going to keep insurance companies honest. With healthy competition, insurance companies won't be able to sit there and charge outrageous prices. In a competitive market, if they do, they'll be priced out and forced to close, just like any other company failing to meet their customers' needs. That's why I'm encouraged by recent efforts to repeal the antirust exemption for health insurance companies.

We also need to go further and make sure every American has a meaningful choice of health care plans with one guaranteed viable option. More than ever, in the wake of the insurance industry's report, we now see why a public option is a must. If the insurance industry were really interested in improving health care reform, they would have published their report months ago, when it could have helped shape the debate. Dropping their report at the 11th hour only served to highlight that insurers are interested in their own welfare, not progress.

A final point. Health care polling has been all over the map over the last few months and is testing the resolve of policy-makers and politicians. However, even the best polls out there are a snapshot of an unfinished race. The polls that matter are the ones that will reveal how Americans feel about health reform feel once they've experienced it's benefits.

While we'll never know how the American public would react before legislators act, we can get a good clue from Switzerland. There, a mandate for citizens to own health insurance won by the slimmest of margins. Today, more than a decade and a half after the Swiss reforms passed, a far greater percentage of the electorate and vast majority of the population support the mandate and don't want to see it over turned. The Swiss perceptions of the reforms shifted once individuals felt the difference it made in their lives. That's a lesson we're going to need to take to heart in the US.