A centerpiece of Democrats’ health care reform agenda in both the House and Senate is the mandate for individuals to have health insurance. The mandate would be coupled with income-based premium subsidies, guaranteed issue of health insurance without pre-existing condition exclusions, prohibition of premiums based on health status, and limits on age-related premium variation.

Proponents argue that an individual health insurance mandate with significant penalties for non-compliance would significantly increase the number of people with coverage, improve their access to medical care, and reduce the cost of uncompensated care shifted to other parties. In addition, the proposed restrictions on health insurance underwriting and pricing require a strong mandate to prevent many people from waiting to buy coverage until they need expensive care, which would drive up the cost of coverage.

Forcing people to buy health insurance would greatly expand the government’s role in health insurance and health care. Rather than “bend the cost curve,” the proposed individual mandate would increase health care costs and over time lead to even greater government control over health care and insurance.

A mandate necessarily requires government prescription of the types and amounts of medical services that must be insured. The proposed minimum permissible coverage packages would include broader benefits and less cost sharing than coverage many people obtain voluntarily, increasing the cost of coverage. More fundamentally, the federal government would become the ultimate arbiter of the types of care that are reimbursed by insurance.

By increasing the amount of care insured, a health insurance mandate necessarily would increase moral hazard and excessive utilization of certain types of care, a widely acknowledged source of high health care costs. Costs would also increase due to higher prices for medical services, at least until the supply of health care providers expands to meet increased demand for care.

Even with sizable premium subsidies, a strong individual mandate and proposed insurance rating restrictions would require many people to buy expensive coverage against their will, often at premium rates significantly higher than their expected costs of care. Younger and healthier people, for example, on average would be required to pay higher premiums to help finance coverage for older and less healthy people. The implicit taxes in this scheme create substantial political pressure for larger premium subsidies, increasing the cost of subsidies that must be financed by explicit taxes or deficit spending, in part because they would become available to more people who would have insured without any subsidy.

The implicit taxes embedded in an individual mandate also create substantial pressure to weaken the mandate through exemptions, low penalties, and/or lax enforcement. Low penalties and lax enforcement characterize mandatory automobile liability insurance, where in most states 10-15 percent or more of all drivers fail to comply with the mandate to buy coverage. A weak health insurance mandate would mean that fewer people become insured. When combined with proposed restrictions on health insurance underwriting and pricing, a weak mandate would produce more adverse selection and higher average premiums as older and less healthy uninsured people sign up for coverage, while younger and healthier people delay buying coverage until they need costly care.

In short, while there would be some reduction in the cost of uncompensated care, an individual mandate would greatly expand government control and make health insurance and health care more rather than less costly. Higher costs would make further government intervention and control of health care inevitable.

There are a number of market-oriented alternatives to the Democrats’ agenda that would avoid substantial expansion in government control over health care and insurance, make health insurance more affordable and available, and slow the growth in health care costs (even without tackling medical liability reform).

• Enact tax credits for the purchase of health insurance to make coverage more affordable, level the playing field between individual and employer-sponsored coverage, and limit the tax subsidy for high cost, Cadillac health plans.

• Expand Health Savings Accounts, thus encouraging more consumers to assume greater financial responsibility for decisions regarding their health and medical care.

• Permit people to buy insurance across state lines by authorizing health insurers that designate a “primary” state for regulatory oversight of underwriting, pricing, and coverage terms to sell insurance nationwide according to the rules of the primary state.

• Enact legislation providing subsidies to state-based high-risk pools offering coverage, without regard to pre-existing conditions, at subsidized premium rates that are high enough to discourage people from waiting to buy coverage until they need expensive care.

• Provide additional, narrowly targeted subsidies to improve access to care for persons with very low incomes who do not currently qualify for Medicaid.

These incremental, market-oriented reforms offer the prospect of meaningful improvements in our health care and insurance system, while expanding consumer choice, at much lower cost than Democrats’ proposals. They deserve a chance before embarking on the costly road to government run health care.