Cost and Coverage: The Impact of Implementing Various State Health Care Reform Proposals Nationally. The Role of a Mandate


An individual mandate is meant to address the phenomenon of “free-riders,” or individuals without coverage who nonetheless access care but do not have the financial resources to pay for it.  The cost of this “uncompensated care” is paid for through increased provider rates, higher insurance premiums, and Federal and state subsidy programs for health care institutions that are funded with taxpayer dollars.  It is believed that if all individuals are insured, uncompensated care costs will be reduced or eliminated, thus decreasing provider rates and health insurance premiums and abolishing the need for Federal and state uncompensated care subsidy programs.

In addition, because many of the uninsured are young and healthy individuals who forgo coverage due to a perceived lack of health care needs, the covered population tends to be disproportionately sicker.  By requiring the young and healthy to enroll, their participation in health insurance pools will spread the risk and reduce adverse selection.  Their good health will improve the overall health rating of the pool, reducing overall premium costs.

However, a mandate for coverage does not guarantee access to health care for everyone.  Many individuals have coverage, whether public or private, and still have limited or no access to certain providers and specialists because their insurer’s provider network does not have contracts with an adequate number of these types of doctors or practices.  As well, purchasing health insurance does not necessarily relieve the purchaser of some out-of-pocket costs associated with the services they receive.  Many policies have deductibles and almost all have co-payments, which for some may make accessing care unaffordable.  So while individuals would be fulfilling their legal obligation to be covered by purchasing a policy, they would not necessarily have improved their circumstances for accessing medical care.

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