The Mandatory Minimums

By Author: Marcus Stalder
Total Articles: 491
Comment this article

Thanks to the healthcare debate, everyone has got all fired-up about the question whether insurance should ever be made mandatory. This has been picked up by the right wing of the GOP with the Tea Partiers in full bitter resentment at the idea anyone should ever be required to buy an insurance policy. The newly elected members to legislatures around the country are coming into office with the idea they should roll back Big Government and leave the choice about everything to the people. At first, there was no sign the law might be in their favor, but one federal judge has now ruled a part of Obamacare is unconstitutional. It seems this is now headed for the Supreme Court. Except neither side is very keen for this to be resolved quickly. It may be 2013 before we have a final ruling. So where does this leave the everyday problem of insuring the vehicles we rely on to get around?

In theory, the two types of insurance are different and so insuring vehicles probably can be made mandatory. The reason? It's your decision whether to buy a vehicle. You could walk, ride a bicycle or use public transport. If you choose to drive, ...
... then you have to carry insurance. But whether you fall ill is not under your control. People are what they are, so forcing everyone to buy insurance just for living does start to look more like a tax. We will see what the Supreme Court says. But the world is already changing. Take Wisconsin as an example. A newly elected Republican is co-sponsoring the Consumer Choice Auto Insurance Act. This would repeal the recent increases in the minimum liability requirements. It would still be mandatory to carry some insurance. Just less of it. The justification is that the insurers would then reduce the premium rates and so make life slightly more affordable. An alternative explanation is that even the newly elected State Rep did not feel able to justify repealing the mandatory insurance altogether.

In other states, the law-makers are reviewing the minimum amounts for the mandatory coverage. They are all proposing further increases. Taking account of inflation over the years, these amounts have been devalued by about 700%. All the costs of medical treatment and repairs have been increasing and are no longer covered by these minimum amounts. The whole point of mandatory minimums is being undermined by the continuing failure to make a real increase. Except, of course, this would force a rise in the car insurance rates and would be very bad politics during a recession. Pushing up costs on what most people consider a necessity will inspire anger. No elected politician voting for this would be safe during the next election.

With everyone focussing on budget deficits both at state and federal levels, anything that pushes up the cost of living hits the poor and middle class at a time when they are most vulnerable. Since tax increases are politically unacceptable, the only way of reducing the deficit is to reduce both discretionary and entitlement spending. This will affect the poor even more directly yet, as everyone hunts for those elusive cheap auto insurance policies, they could have less to spend on keeping their vehicles on the road.