A Health Insurance Mandate That Works Like Auto Insurance? Think Again

In building the case for mandatory health insurance, President Obama and congressional Democrats are comparing a proposed requirement to buy health coverage to the need for all car owners to buy auto insurance. 

"Unless everybody does their part, many of the insurance reforms we seek, especially requiring insurance companies to cover preexisting conditions, just can't be achieved," Obama said in his address last week to Congress. "That's why under my plan, individuals will be required to carry basic health insurance -- just as most states require you to carry auto insurance." 

But this analogy is becoming a liability, so to speak. 

It's true that most states require drivers to carry auto insurance. And it's equally true that the administration wants a federal law that will require individuals and employers to buy health insurance. 

But the similarities end there. 

Now critics are starting to urge the administration to use a different, more representative comparison to justify a virtually unprecedented federal mandate. 

"It doesn't make sense," Robert Gordon, senior vice president for policy development and research at The Property Casualty Insurers Association of America, said of the analogy, noting several inconsistencies in the comparison. 

First, the auto insurance mandate is easily avoidable. If you don't want to pay, don't drive a car. 

Don't want to pay for health insurance? Drop dead. 

"You can avoid the auto insurance mandate by divesting yourself of a car. The only way to avoid a health insurance mandate is by divesting yourself of a body," said Michael Cannon, director of health policy studies at the Cato Institute. 

Second, auto insurance is mandated in large part so that drivers carry liability insurance to cover other people and other cars they may damage. Covering damage to their own cars is of secondary importance. 

Many drivers can go without collision insurance if they like. If a hood is dented on the car of someone without the coverage, that person can drive around with a dented hood. But the only kind of health insurance Obama is talking about is collision insurance. If someone's body is a jalopy, he or she still has to get covered. 

Former Department of Health and Human Services officials Peter Urbanowicz and Dennis Smith noted this difference in a paper examining the constitutional implications of an individual mandate for The Federalist Society for Law and Public Policy Studies. 

"The primary purpose of the auto insurance mandate was to provide financial protection for people that a driver may harm, and not necessarily for the driver himself," they wrote. They also noted that the auto insurance mandate acts as a "quid pro quo" for the states to issue a driver's license. 

Nevermind that Obama explicitly opposed such a provision during the Democratic presidential primaries. It was one of the few policy differences between him and then-Sen. Hillary Clinton

"My belief is, the reason that people don't have it is not because they don't want it but because they can't afford it. And so I emphasize reducing costs," Obama explained at a February 2008 debate in Austin, Texas. 

Fast forward to last week, before a joint session of Congress, when the president wholeheartedly embraced the concept. 

Obama does want to ease the burden by offering some kind of alternative to private insurance, possibly a government-run option, and providing for exemptions. Senate Finance Committee Chairman Max Baucus' plan includes tax credits for those who might have trouble affording coverage. But it also imposes hefty fines on those who don't comply. 

Auto insurance mandates have not eliminated the problem, though. 

Donald Griffin, also with The Property Casualty Insurers Association, said anywhere from 8 to 14 percent of motorists are uninsured in most states despite the requirement. 

"Still, we have this problem, so those requirements don't seem to do much to solve the uninsured motorist problem," he said.

There are, of course, other differences between health care reform as Obama proposes it and the auto insurance industry. The kind of payout caps Obama wants to restrict and other limitations on coverage are standard practice in the auto insurance industry. Plus, the regulation of that industry is decided at the state level. Not the federal level. 

The truth is, there is not really a comparison out there. 

The Congressional Budget Office said as much in 1994 when it issued a paper on the Clinton-era call for a health insurance mandate. 

"A mandate requiring all individuals to purchase health insurance would be an unprecedented form of federal action," the CBO said. 

Interestingly, the closest thing the CBO could find to mandatory health insurance was the draft. 

"Federal mandates that apply to individuals as members of society are extremely rare. One example is the requirement that draft-age men register with the Selective Service System. The Congressional Budget Office (CBO) is not aware of any others imposed by current federal law," the report said. 

In light of the 1994 report, Cannon amended his earlier comment. There is one way to avoid a health insurance mandate, he said: "Fleeing to Canada."