For nearly 40 years, the practice of insurance by government mandate has been with us in the form of car insurance. Under the banner of consumer protection, a process regarding mandated car insurance coverage began in the 1970s that eventually was adopted into nearly every state. Now, years later, with all this data available for us to draw from, what can be learned from government-mandated insurance demands and how consumers respond to them to help in the health insurance reform?
As we examine consumer behavior toward laws regarding a state-mandated car insurance policy, we can learn some time-tested truths. "Not everyone complies,” said Scott Harrington, health care and risk management professor at the University of Pennsylvania. “The auto insurance mandate is almost everywhere. But it's not rigorously enforceable." If this is indeed true, it begs the question, if the individual states can't enforce driver insurance laws on a smaller scale, how does Congress propose to enforce the massive health insurance mandate being considered at the Federal level? Will people respond to the new laws?
Within the debate on mandated insurance another interesting factor surfaces. Based on insurance industry data, the same number of uninsured motorists almost exactly coincides (within one percentage point) with the number of people without any health care insurance now. David Sampson, CEO and president of the Property and Casualty Insurers Association of America, tells us that a driver’s personal financial status — not the laws of their state — indicate whether or not drivers will buy car insurance. Though mandated by law, do we suppose this pattern of behavior will change somehow when it comes to health care?
The states’ car insurance mandates have fines and penalties attached to them for non-compliance. But the fact of the matter is, it appears people will do what they can afford and what they, on their own day-to-day list of survival of priorities, deem necessary. Not everyone has adequate guaranteed income and an elite health care program. The result is that people don’t comply with the “laws” regarding car insurance.
With history as our backdrop, we must ask ourselves the inevitable and honest question — will a government-mandated health care law enforced at the Federal level even work, or is it a grand, expensive illusion fated for the scrap heap of history? What we know works over time in all markets and throughout the history of the world is open competition between providers of any good or service.
Based on our knowledge of the effectiveness of government-mandated car insurance, many people doubt that any form of government-mandated health insurance will provide a solution for the number of people without health insurance. If the reform passes, only time will tell.