An Impossible Mandate
Most Americans will be required to have health insurance beginning on January 1, 2014. The type of insurance you have, where you will get it, and what you will pay will be determined not by you and your employer or by free choice in the marketplace, but by government. Here are the biggest problems the mandate will create.
Health costs per capita have been rising at twice the rate of per capita income for the past forty years. President Obama did not create the underlying problem. Nor is this a uniquely American problem. The result: healthcare spending will consume more and more of our income with each passing year.
Most people will continue to obtain health insurance through an employer. The Congressional Budget Office estimates the average annual cost of a minimum benefit package at $4,500 to $5,000 for individuals and $12,000 to $12,500 for families in 2016. Thus, the minimum cost of labor will be a $7.25 cash minimum wage and a $5.89 health minimum wage (family), for a total of $13.14 an hour or about $27,331 a year.
For above-average-wage employees, this is all straightforward. Expect wage stagnation over the foreseeable future, as employers use potential wage increases to pay for expanded (and mandated) health benefits instead. At the low end of the wage scale, however, the effects of this new law are going to be devastating.
Further, although health economists have known for decades that these are the workers that most need help in obtaining insurance, there are no new subsidies to help employees at Walmart or McDonald’s or Denny’s or any other restaurant chain buy health insurance. These workers and many others are at risk of losing their jobs.
Why is it good not to have a mandate? Because once the government tells us what insurance we must have, every special interest imaginable will lobby Congress to become part of the mandated benefit package. This has already happened at the state level, where insurance plans in various states are required to cover providers ranging from acupuncturists to naturopaths and services ranging from in vitro fertilization to marriage counseling. All told, there are 2,156 mandates at the state level. They increase the price of insurance and have priced as many as one-in-four uninsured people out of the market.
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