Frist: An Individual Mandate for Health Insurance Would Benefit All

Nobody should fear bankruptcy due to illness or injury.

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William H. Frist, a Tennessee Republican, is a heart surgeon and the former U.S. Senate majority leader.

I believe in limited government and individual responsibility, cherish the freedom to choose, and generally oppose individual mandates—except where markets fail, individuals suffer, and society pays a hefty price. Let's face it, in a country as productive and advanced as ours, every American deserves affordable access to healthcare delivered at the right time. And they don't have it today.

It is time for an individual health insurance mandate for a minimum level of health coverage. Catastrophic coverage would be an appropriate place to start.

In our reimbursement-driven, public-private health sector (which delivers the most robust health services on the globe), the only way affordable access can be achieved is for every citizen to have some type of insurance. Today as many as 46 million don't have it (some estimates are lower, with President Obama pegging it at 30 million), and about 15 million are "hard-core uninsured," without access to either government or private plans. No industrialized country in the world leaves such a large proportion of its citizens without coverage. And insurance matters. Those without health insurance on average receive poorer care and die sooner.

The argument for an individual mandate centers on three principles.

First, it would achieve fairness. No family in America should fear bankruptcy because of an accident, a child's cancer, or a heart attack. That is the purpose of insurance. An individual mandate is the only way to achieve affordable insurance coverage for every American in a pluralistic, public-private sector.

Second, it would eliminate wasteful cost-shifting. Though many uninsured people do eventually get care in emergency rooms, the $30 billion to $50 billion in bills for "uncompensated care" or "bad debt" they generate are inefficiently shifted to the privately insured, wasting scarce health dollars. These economic distortions are behind the dollar aspirin tablet and the $10 Band-Aid you discover on your hospital bill. No one knows the real price of anything. Such lack of transparency destroys any hope for true market forces, like prudent purchasing by the consumer, which would normally hold the "health spending curve" in check.

And few today who remain "voluntarily uninsured" fully appreciate the risks they would face in the case of a catastrophic event.

Third, it would reduce adverse selection. When healthier people opt not to carry insurance, only those with poorer health, and thus higher costs, remain in. This leads insurance prices to spiral up. And it further impedes markets' ability to mitigate risks and prevent personal economic catastrophe. The "free-riders" who do not purchase insurance and the "voluntarily uninsured" who depend on emergency room care paid by others would then pay their fair share for services received.

Critics argue that pooled risk-sharing indeed requires cross-subsidization of the sick and thus becomes an added cost to the healthy. It requires net additional spending, and it is difficult to administer because of necessary subsidies for the near poor. And it is challenging to enforce. While these critiques are fair, they are not insurmountable, especially if the new mandate was at least initially limited to catastrophic care.

The policymaker's challenge is to determine the societal risk of establishing an individual mandate. Since we have no national experience with such coverage, we must tread gently. Indeed, the only experiment under way in the country began just three years ago in Massachusetts.

Advocates and critics alike use the Massachusetts plan's early results to support their respective positions. Almost half a million are newly insured, and, remarkably, more than 40 percent of these have purchased private insurance. Employer-sponsored private coverage has increased by 160,000 in the state because people who had previously refused coverage now see it as advantageous. Uncompensated care has fallen by almost half. But—and this is the unfinished story that haunts the policymakers—costs have been very high and continue to escalate. Estimates are approximately $2,000 per person, well beyond policymakers' initial predictions. And universality has not been achieved.