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Analysis: Individual Mandates Necessary for Universal Coverage

By Miriam Straus, CQ Staff

January 30, 2008 --Universal health insurance will not be achieved without individual mandates, according to an Urban Institute analysis published Wednesday.

Many people would choose not to obtain insurance under a voluntary system, the report authors contend, adding that voluntary health coverage appeals more to people with higher health costs and would result in higher premiums and instability in insurance pools. As long as large numbers of people remain uninsured, the government must continue to pay for their care and cannot redirect the money to other health care changes, the authors said.

"Even if subsidies, benefits and administrative simplifications are sufficient to reach two-thirds of the uninsured [a reach beyond what any study to date has shown for a voluntary system], this would still leave 15.5 million people uninsured," the authors wrote. They note that this would be significantly lower than the current estimate of 47 million uninsured Americans. Their analysis predicts, however, that "as health care costs and insurance premiums increase, these numbers could easily erode unless further government dollars were injected into the system."

Michael Tanner, director of Health and Welfare Studies at the Cato Institute, said requiring people to purchase health insurance "is pulling the cart before the horse."

"The first thing you need to look at is what is driving costs," Tanner said. Regulations, such as the current prohibition against purchasing insurance across state lines, are a major factor in the cost of insurance, he said.

In addition, we have a "fourth party payment system," Tanner said. Employers who provide health insurance are shielding workers from the true costs of insurance, he said. "Those who are left outside of the employment system get stuck with the added costs." Consumer choice and competition are the keys to overhauling health care, he said.

Health insurance has been a key issue in the 2008 presidential race. Democratic presidential candidate Sen. Hillary Rodham Clinton, D-N.Y., has called for an individual mandate that would require all people to have health insurance. Her Democratic rival, Sen. Barack Obama of Illinois, would require that children have health coverage and that dependents be covered under their parents' insurance up to age 25, but his proposal would not require all adults to obtain insurance.

Republican presidential candidate Sen. John McCain of Arizona has highlighted his opposition to individual health insurance mandates. A recent McCain campaign ad attacks rival candidate and former Massachusetts Gov. Mitt Romney for signing a state law that requires all adults to purchase health insurance or face fines. McCain called Romney's plan "a big government solution that costs taxpayers."

Romney hasn't called for an individual mandate in his presidential campaign.

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