RALEIGH – When faced with a problem, the political class tends to react simplistically. Pass a law! Raise a tax! Give away other people’s money!

Societies are more complex that that, however. If you reward indolence by taxing thrift, you will get more indolence and less thrift. If you pass a new regulation that makes people feel safer, many will react by engaging in more-reckless behavior, thereby offsetting much or all of the expected safety gain.

In health care, many activists are enamored with the notion of passing a law to require that everyone have health insurance. Massachusetts famously enacted a “universal-coverage” bill a couple of years ago, signed by none other than recently presidential candidate Mitt Romney. The poor would get essentially all of their health-insurance bill paid by taxpayers. Uninsured people with middle-class incomes would receive the full value of the tax exclusion previously available only with employer-based insurance – worth thousands of dollars – and some would also receive sliding-scale subsidies based on income.

Now, passing a law to require that everyone get health insurance will not, in fact, get everyone health insurance. Critics of the Massachusetts plan knew this to be true because of examples in other fields. States have long required motorists to purchase liability insurance, yet most of us also pay for insurance coverage in case we get hit by the thousands of drivers who don’t comply with the law.

The early experience with implementing the Massachusetts plan provides further evidence for the proposition that mandates aren’t magic wands. To enforce the individual mandate, state officials imposed a penalty of up to $912 a year for noncompliant residents. But because the penalty is less than the cost of the insurance plans available in much of Massachusetts, plenty of taxpayers are simply going to eat the cost and remain outside of the insurance system.

While this may sound like bad news, it may well have qualified as worse news if all Massachusetts residents had enrolled, since so many would have qualified for at least partial taxpayer subsidy. As health-insurance expert Greg Scandlen reports, the plan did result in 300,000 more people enrolling in government-run health or one of the plans participating in the state-run insurance connector. That’s not all of the previously uninsured, but it was enough to overshoot the original cost estimates. The state will have to come up with another $150 million to cover the subsidies, while future premium increases will be higher than expected.

As is so often the case in political debates, a big part of the problem lay in the definition of “health insurance.” If the state is going to mandate that you buy health insurance, you can’t be allowed to decide what health insurance you value at the prices offered in the market. For its mandate to be meaningful, the state has to define the minimum level of health insurance, which creates a golden opportunity for what economists call “rent-seeking” – using the coercive power of the state to reward special-interest groups with income streams that they could never earn through voluntary transaction.

Because of insurance-benefit mandates from regulators and the state legislature, health plans in Massachusetts are exorbitant. Far from simply covering the risk of a major unforeseen medical condition putting a family thousands of dollars into debt, the “minimum” health-insurance plan covers most routine medical services. Mandates are popular in most state capitals because the beneficiaries are persistent and well-organized – physicians, nurses, chiropractors, psychologists, pharmaceutical and medical-device manufacturers, etc. – and most large businesses with political heft are exempt from such mandates under federal law because they are self-insured, so they don’t have any reason to weigh in against them. Indeed, if insurance mandates raise the compensation costs for small firms with which the big firms compete for labor or sales, the big firms like that.

By all means, policymakers in North Carolina should look northward to Massachusetts – not to find out what to enact in our state, but instead to find out what to avoid.

Hood is president of the John Locke Foundation.