REFORM: Newt Gingrich on "Free Riders" and the Individual Mandate

If you were paying attention to your health care headlines recently, you might have doubled back for a second look at this caption: "Gingrich suggests insurance mandate for some." Huh? Is Newt Gingrich thinking seriously about a requirement to purchase health insurance? Is that a typo? No.

Let's recap. At an Alegent Health event in Omaha, the former Speaker of the House suggested that a strategy to combat high health care costs should include a requirement that people who earn more than $75,000 a year purchase insurance. According to an AP story, Gingrich said it was, " ‘fundamentally immoral' for a person who can afford insurance to save money by going without, then show up at an emergency room and demand free care."

This is in keeping with some Gingrich's past comments about individual responsibility in the context of health reform. In a June 2007 opinion piece in the Des Moines Register, he said:

Personal responsibility extends to the purchase of health insurance. Citizens should not be able to cheat their neighbors by not buying insurance, particularly when they can afford it, and expect others to pay for their care when they need it. However, an individual mandate is an acceptable option only when the larger health-care system has been fundamentally changed. It is unjust to require an individual to buy into a broken and dysfunctional system.

Here's the bottom line from some of our own work at New America on uncompensated care, "free riders," and the uninsured—16 percent of individuals who are uninsured are above 400 percent of the poverty line (about $80,000 a year for a family of four and $40,000 for an individual). They are the classic "free riders"—people who could likely afford insurance, but choose not to buy it. When the uninsured receive care that is not paid for, the insured pay higher premiums as a consequence. Hardly seems fair or efficient.

Gingrich appears to get this, as did fellow Republicans Arnold Schwarzenegger in California, and Mitt Romney in Massachusetts. Romney made the individual mandate central to his state reform proposal while he was governor of Massachusetts, and confronted this issue head on in a Wall Street Journal op-ed, during the heat of the health reform conversations in his state. "Some of my libertarian friends balk at what looks like an individual mandate," he wrote. "But remember, someone has to pay for the health care that must, by law, be provided: Either the individual pays or the taxpayers pay. A free ride on government is not libertarian."

The reality of an individual mandate (when coupled with subsidies so that insurance is affordable and market reforms so that coverage is accessible), is that it would not only address the "free rider" problem, but also serve as a tool to enhance insurance market competition. When combined with market reforms and subsidies, the mandate would help move insurers away from a business model that relies on marketing and underwriting and towards a strategy that involves competing for customers based on performance and price. This is a good thing...and something those in favor of market competition could get behind.