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Lessons on Insurance Mandates for the Candidates
Senators Clinton and Obama are continuing the debate over how best to
ensure that everyone has health insurance and access to care.
Some online analysts have raised questions about the effectiveness of mandates by reviewing car insurance mandates.
We have been spending some time looking at access to car insurance in our transportation research.
Car insurance is regulated by states. Only two states do not require owners to maintain insurance – New Hampshire and Wisconsin. Yet, a recent report finds that nearly 15 percent of all owners in the nation are uninsured.
What happens in the two states without a mandate?
Wisconsin ranks 20th with about 14 percent uninsured, while New Hampshire has one of the lowest rates of all states at 9 percent. Other state rates range from 26 percent (Mississippi) to 4 percent (Maine).
Some writers have noted that only California has a low-cost insurance option for low-wage workers. In that state, these writers point out, the uninsured rate is one of the highest at 25%.
We’ve interviewed some of the key actors implementing the California low-cost insurance option and find that there is a major problem with outreach and access. Most low-wage workers probably don’t even know about the option and the incentives don't seem to be structured in a way that encourages brokers to market the low-cost option.
A number of people are working on improving knowledge and use of the low-cost option in California, but we should not assume that low-wage drivers wouldn’t buy it—-if they knew about it.
So, what do we know? A mandate does not guarantee universal coverage in this case. And creating and implementing a lower-cost insurance option for low-wage workers will require creativity, careful implementation, and outreach.
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Comments (8)
It's actually an apples to oranges comparison. Automobile liability insurance has virtually no value to the poor because the prospect of legal liability is meaningless to the judgment proof. So what if I get in an accident, if I have nothing, you can win nothing from me. This is the reason that most of us (whether we know it or not) have uninsured/underinsured motorist protection with our auto policies.
Having or not having health insurance, on the other hand, may make the difference between life and death to a poor person and accordingly has real value. The emergency room is only a stop gap and does not provide chronic or long term illness care. So the mandate may make a whole lot of sense in the area of health care, but not as result of comparing it to auto insurance.
February 27, 2008 11:00 PM | Reply | Permalink
Nothing you've said explains what would make a mandate for health insurance yield better results than described above. Your argument is also fundamentally incorrect.
You say: "So what if I get in an accident, if I have nothing, you can win nothing from me." This isn't true. A judgment is still a judgment. You wages can be garnished, etc. To use the parlance of the court system, you will now be a debtor. The same thing happens when someone ends up in an emergency room. You have an accident, you go to the emergency room, you receive care a huge bill. If you don't pay that bill it will be sent to a collections agency and eventually it will become a legal judgment against you.
February 28, 2008 1:06 AM | Reply | Permalink
Try and collect on a judgment against a poor person, it's an exercise in futility. Wage garnishment is limited to a small percentage of income and assumes regular full-time employment. Most of their personalty, if they have any, is exempt from attachment. Judgment proof is not a term I invented, it describes people against whom a judgment is worthless. My argument is that poor people do not need liability insurance because the protection it affords is against assets and when you have no assets, you need no protection. Protecting your health is an entirely different proposition.
February 28, 2008 10:11 AM | Reply | Permalink
Uh huh. And what I explained was how your argument is void because the enforcement scenario is exactly the same when it comes to health insurance. A judgment is a judgment, this is how debts are enforced in law. It doesn't matter what the bill is for.
February 28, 2008 5:46 PM | Reply | Permalink
And, by the way, the fact that a health bill can't be collected from someone with no money any more easily than a bill for an auto accident (which frequently involves medical bills) is the whole reason that the free rider problem is a problem: people can't pay the bills and the costs are passed on to the rest of us as a matter of expense to the insurance company that holds the outstanding debt.
The scenarios are almost exactly analogous.
February 28, 2008 5:49 PM | Reply | Permalink
Something to remember: the penalty for
driving without insurance is pretty stiff in most states. The risk (setting aside the possibility of a judgment or loss of the car from damage, leading to job loss) can include license suspension, serious fines, vehicle impoundment, and jail time.
There are certainly differences between car and health insurance, yet there are still lessons in the comparison.
February 28, 2008 8:05 AM | Reply | Permalink
I agree there are lessons to compare. Just because a herring is red doesn't mean the herring is nonexistent. That's why we drag a red herring across the primary track --it is a valid scent, but is the wrong scent for the dog to track. We want the dog to stay on the right course, and not get distracted and run off in search of a red herring.
February 28, 2008 4:37 PM | Reply | Permalink
I see no analogy. If I am poor, auto insurance is worthless to me, because it provides me no benefit. Health insurance, on the other hand, affords me peace of mind and the opportunity to obtain real heathcare as opposed to emergency room assistance on an ad hoc basis. Whether or not I become a judgment debtor as a consequence of not having either is out of the equation because neither the health care provider nor the plaintiff can get blood from my stone. The difference is that liability insurance only benefits third parties while health insurance provides highly desirable health benefits to the insured policyholder.
February 28, 2008 10:06 PM | Reply | Permalink
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