South Carolina Healthcare Voices

The “individual mandate” in President Obama’s Affordable Care Act has provoked incredible enthusiasm among the act’s supporters and towering rage in its opponents. The obligation either to purchase insurance or to pay a fine whose proceeds would be used to offset the cost of care to the uninsured is viewed either as an essential part of the architecture of health care reform or as an affront to liberty. In few places has the attack on the individual mandate been more vociferous than in South Carolina, where both new Governor Nikki Haley and Senator Jim DeMint are leading members of the Tea Party movement. They view the individual mandate as inimical to our Constitution and the worst manifestation of government excess.

So it may surprise you to know that South Carolina has its own individual mandate—structured exactly like the federal health care mandate, but for auto insurance. Unlike virtually all other states, which require every driver to carry liability insurance, South Carolina has a more complex system. Under South Carolina state law, in effect for more than a decade, a car owner in the state must either have liability insurance or obtain an “uninsured motorist registration.” The fee for the uninsured registration is $550 and is deposited into the “uninsured drivers fund.” The website of the South Carolina Department of Insurance explains that the $550 fee is used to “offset the costs of uninsured motorist coverage.” (Some portion is also used for consumer education programs.) The “uninsured motorist coverage” is a cost borne by drivers who have their own liability insurance but also need additional insurance to provide for coverage in the event they have an accident caused by a driver who does not have liability insurance—the “uninsured driver.”  By statute—SC Code section 38-77-155—funds from the uninsured drivers fund are distributed to insurers who offer this uninsured motorist coverage. Bottom line: South Carolina forcibly transfers money from drivers who refuse to buy insurance to drivers who do buy insurance to cover the costs of risk created by the drivers who don’t buy insurance. (more…)