Monday, October 08, 2007

The Case against Insurance Mandates

Writing in Businessweek, economist Glen Whitman makes the case against individual health insurance mandates. An excerpt:

Individual mandate supporters typically justify the policy by citing the problem of uncompensated care. When uninsured patients receive health services but don't pay for them, the rest of us end up footing the bill one way or another. So advocates of insurance mandates contend, plausibly enough, that we should make the free riders pay.

But how big is the free-rider problem, really? According to an Urban Institute study released in 2003, uncompensated care for the uninsured constitutes less than 3% of all health expenditures. Even if the individual mandate works exactly as planned, that's the effective upper boundary on the mandate's impact.
Thanks to Tyler Cowen for the pointer.

Here is Whitman's longer piece on the topic.