The intensity of debate around health care reform is reaching new heights, especially around mandates. They were a key part of the Massachusetts reform law and are central to the Clinton health proposal. Obama’s reform plan does not include a mandate provision, at least initially, although he indicated during the early debates that he would consider adding one later if voluntary programs don’t succeed in getting near-universal coverage.
Clinton has been hammering Obama over this issue for months, saying that her plan guarantees “universal coverage” and his doesn’t. Here’s the simple fact: Mandates do not create universal coverage. When the pundits were celebrating the “Massachusetts miracle” — including many of the same “health wonks” now touting the Clinton plan — I was one of the few to point out that the plan was actually more mirage than miracle. It kicked the unpleasant decisions down the road so that Mitt Romney and his Democratic and labor collaborators could take an undeserved victory lap at the signing ceremony.
Sure enough, the legal authority responsible for the Massachusetts plan eventually acknowledged that the plan will leave 20% of that state’s uninsured without coverage, and the real number may be higher. Why? Because there is a wide band of people who would suffer financial hardship if compelled to pay the premiums, and it’s financially infeasible to subsidize them all.
The Clinton plan, should it ever be passed, will suffer the same fate. I will happily bet Paul Krugman on that point. He should know better than to claim that the Clinton plan could provide universal coverage. Experience and political common sense say that just ain’t so.
That’s not to say there aren’t valid arguments in favor of mandates. There are, which is why they’re part of conventional health policy wisdom. Mandates solve the “selection problem,” where insurance costs become too high because only sicker people buy insurance voluntarily. They also allow funds that are now used to reimburse providers for treating the uninsured to be used in better ways. And I think the Obama team is over-optimistic about voluntary compliance levels.
Krugman and other supporters of the Clinton plan are now pointing to a study by the respected Urban Institute as a validation of their position. It’s a good study that shows mandates are the only way to achieve something like “universal coverage” — if you first exclude single-payer coverage from the mix. (They also exclude my preferred approach — core basic coverage paid from tax revenues, with the ability to “buy up” into private plans through a subsidy/voucher approach.)
Here’s one problem: The paper’s authors admit, albeit indirectly, that they overestimated the ability of Massachusetts to achieve universal coverage. They make the same mistake here. Here’s another: Sen. Clinton and the supporters of her plan have been evasive about how they would enforce this mandate, and enforcement is key to the Urban Institute’s findings. In a recent interview she was forced to acknowledge, for example, that she would consider garnishing wages. And while she has boasted about tying mandate obligations to personal income, she has been equally vague about what level of personal income she might allocate for healthcare.
Those provisions are political non-starters. Massachusetts is easy compared to the country as a whole — both in terms of political climate and the scope of the uninsured problem. Yet they had to leave 20% of the uninsured without coverage. That figure would equate to about 8 million people nationwide. If we accept Sen. Clinton’s figure of “15 million uninsured” under the Obama plan (and that figure was chosen by a journalist, not a technical study), that means a difference of seven million — in return for a plan that might actually get passed in Congress. (The gap could be filled in later, after premiums are brought under control and it becomes more politically feasible.)
And consider what mandates might do to a family of four. While Clinton won’t tell us the percentage of income she’d tie to mandates, many analysts have been using 10%. If premium assistance is provided up to 300% of the poverty level, a family of four trying to survive on $75,000 could be forced to pay $7,500 to insurance companies or in health copayments. The alternative could be tax penalties or garnished wages. That seems unfair. I also believe it’s a serious misread of American political culture to think that kind of mandate could ever get through Congress.
Krugman was outraged by an Obama ad that seemed to channel “Harry and Louise” from the 1994 anti-reform campaign. He says that mandates are to “prevent some people from gaming the system,” he writes, as if that family of four could write out that $7,500 check if not for some moral hazard. (Granted, there are “gamers,” but they tend to be the young, healthy, and relatively prosperous.)
We already have a mechanism for “shared responsibility,” and it’s called taxation. Adding 10% to struggling families’ financial burdens reads politically like a highly regressive tax to be paid to insurance companies – and the Wall Street Journal suggests that insurance companies do prefer the Clinton plan. That could create rough political waters in the general elections, especially for a Democrat.
While mandates have real value, political realities and issues of fairness suggests that the health reform process should start elsewhere. What’s even more clear is that they are not a mechanism for creating “universal coverage,” whatever the politicians say.
(extracted from a piece in the Huffington Post)