Posts Tagged ‘john edwards’

Health Mandates: A Talk With Obama Health Advisor David Cutler

December 1, 2007

Hillary Clinton, John Edwards, and Barack Obama have each presented detailed proposals for health reform. The Clinton and Edwards plans include health mandates, which require Americans to obtain health care coverage or face (unspecified) sanctions. The Obama plan does not include mandates.

Health mandates are popular among many Democratic-leaning health policy analysts. The Clinton campaign has been going after Obama aggressively on this issue. They’ve said that the absence of mandates is a basic flaw in Obama’s plan; suggested a cynical political calculus behind Obama’s position said that his position feeds a Republican narrative; and took the position that Obama’s plan is politically vulnerable while theirs (and Edwards’) is a political plus in the general election.

(The preceding positions were echoed today by Paul Krugman – see my response, “Why Paul Krugman Is Wrong …“)

I don’t support any Democratic candidate, but I do have strong opinions about health mandates. As a long-time healthcare policy analyst and health manager in the private sector, I disagree with Paul Krugman, Ezra Klein, Jacob Hacker, and others who support mandates. My differences are based on policy effectiveness, issues of fairness, and Democratic political strategy. I think mandates pose more problems than they solve, and that they could be a political loser for Democrats in the general election.

I’ve been engaged in a collegial debate with Klein, blogger/consultant Joe Paduda and others on this topic for some time (see, for example, here, here, here, and here). During an exchange with Klein over the last week it became apparent that, while I had reasons to support Obama’s policy, it was unclear to me what his team’s current thinking was on the topic.

The team published a rebuttal to Clinton’s campaign late today. Earlier I spoke with David Cutler about mandates. Cutler is Professor of Applied Economics at Harvard, Obama’s senior health advisor, and the principal architect of the Obama plan.
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Why Paul Krugman Is Wrong About Health Mandates

December 1, 2007

Now there’s an intimidating headline to write. Paul Krugman slammed Barack Obama today on the issue of health mandates. Here’s why I believe he’s wrong:

From the beginning, advocates of universal health care were troubled by the incompleteness of Barack Obama’s plan, which unlike those of his Democratic rivals wouldn’t cover everyone.

Two misstatements in this opening sentence. First, while it’s true that Obama’s plan won’t “cover everyone,” neither will anyone else’s. Mandates have never achieved 100% effectiveness. The practical design problems of subsidies, exemptions, and benefit levels that accompany mandates are complex and unwieldy.  That’s why the Massachusetts Authority responsible for that state’s plan – which Krugman would describe as “covering everyone” – just exempted an estimated 20% of uninsured residents from the mandate.

Secondly, the absence of mandates is not necessarily an incompleteness in the Obama plan. I’ll be posting my conversation on this topic with Obama health advisor David Cutler shortly.

Here’s why: under the Obama plan, as it now stands, healthy people could choose not to buy insurance — then sign up for it if they developed health problems later. Insurance companies couldn’t turn them away, because Mr. Obama’s plan, like those of his rivals, requires that insurers offer the same policy to everyone.

As a result, people who did the right thing and bought insurance when they were healthy would end up subsidizing those who didn’t sign up for insurance until or unless they needed medical care.

Mr. Krugman raises some valid concerns here. But what he doesn’t say is that this would only be a temporary problem under the Obama plan. If it failed to achieve enrollment rates high enough to offset this ‘selection effort,’ other measures would be used – including potentially mandates.

The main difference between Obama’s plan and his rivals’ is this: They would mandate health coverage first and fix cost problems later. Obama would do the opposite. While both approaches are problematic, there is a strong case to be made that Obama’s plan is fairer – and much more politically progressive.

Mr. Obama claims that mandates won’t work, pointing out that many people don’t have car insurance despite state requirements that all drivers be insured. Um, is he saying that states shouldn’t require that drivers have insurance? If not, what’s his point?

His point is that the Clinton and Edwards claim – that they provide “universal coverage” – is false. If mandates don’t result in “universal coverage” – and the Massachusetts experience seems to confirm that – than this statement is hyperbole, not fact, and the debate is really about how many people to cover and how fast .  It’s not the black-and-white issue the campaigns are making it out to be.

Mr. Obama accuses his rivals of not explaining how they would enforce mandates, and suggests that the mandate would require some kind of nasty, punitive enforcement: “Their essential argument,” he says, “is the only way to get everybody covered is if the government forces you to buy health insurance. If you don’t buy it, then you’ll be penalized in some way.”

Well, John Edwards has just called Mr. Obama’s bluff, by proposing that individuals be required to show proof of insurance when filing income taxes or receiving health care. If they don’t have insurance, they won’t be penalized — they’ll be automatically enrolled in an insurance plan.

That’s a “terrific idea” with no penalties, Mr. Krugman says. Okay, let’s amend Obama’s choice of words slightly: when people are enrolled in a plan automatically and then don’t pay the premiums they’ll be “penalized in some way.” That’s not hair-splitting – it’s a huge difference. If a family of four is enrolled in a health plan with $10,000 annual premiums, that’s a burden. What will happen if they don’t pay?

We’ll fix that with subsidies, says the mandate crowd. But how much will people actually pay? They’re not saying.

I recently castigated Mr. Obama for adopting right-wing talking points about a Social Security “crisis.” Now he’s echoing right-wing talking points on health care.

I agree with Mr. Krugman about the Social Security issue. And I understand the concern about the use of words like “forced” by the Obama campaign. I understand the concern about the use of words like “forced” by the Obama campaign.  But that’s mild compared to the words the GOP will use in 2008 – and they’ll say them no matter what Obama does or doesn’t do. So rather than crying “foul” when someone challenges them, the Clinton campaign and others should use this as an opportunity to sharpen their talking points – or primary voters may conclude they don’t have it in them to make their case when the going gets tough.

More on Mandates: Ezra’s Take

November 27, 2007

Is Obama’s decision not to include mandates for health coverage “a policy … his campaign regards as a mistake”? Ezra Klein believes so. Maybe he has some insider info that’s not available to the rest of us. But even if the Obama campaign thinks it’s a mistake, I don’t.

Ezra’s piece is an emphatic and succinct summary of the pro-mandate arguments being made from the left by a number of progressive Democratic health policy analysts. Ezra writes:

I’m getting really tired of Obama’s constant excuse that his health care plan isn’t universal because “The reason Americans don’t have health insurance isn’t because they don’t want it, it’s because they can’t afford it.” The reason Americans don’t all have flat screen televisions is because they can’t afford those, too.

That’s true, I suppose – although I’d hesitate to use an analogy between healthcare and expensive consumer electronics when critiquing a policy from the left. But we’re not mandating televisions. And the mandate we are discussing won’t achieve its stated goal of “universal coverage.”

Most experts agree that compliance with a health mandate will be notably less than universal. It will be greater under the Clinton plan than it would be under Obama’s mandate-free alternative. But we’re talking about relative degrees of coverage, not the “universality” that will remain somewhat elusive even under mandates.

We share similar concerns about each of the Democratic candidates, but Ezra specifically sees Obama’s no-mandate position as a betrayal of progressive principles. He writes of his hopes, now unrealized, that Obama would argue “we as a society needed to unify, come together, make temporary sacrifices to build a better world.” Ezra adds, “his remarkable eloquence rendered him uniquely able to articulate the larger progressive narrative, that our nation must move forward as ‘we,’ rather than continue as a country of I’s.”

Here’s my response: First, when it comes to universal coverage and mandates it’s not a black-and-white matter of “we” vs. “I.” Mandates add some more”I’s” into the “we” pile, but not all of us. How many? That remains to be seen. Massachusetts residents will have to choose between expensive health insurance or a tax penalty that starts at less than $300 but quickly escalates to half their expected premium. Many will buy the insurance, but others will take the penalty.

As Massachusetts “Connector” Authority chief Jon Kingsdale said, “There’s good evidence, whether it’s buying auto insurance or wearing seat belts or motorcycle helmets, that mandates don’t work 100%.”

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Democratic Debate Reaction: Health Mandates Are a Bug, Not a Feature

November 16, 2007

Hillary Clinton and John Edwards may have attacked one another last night, but they’re in agreement about the health care mandate issue – and that’s unfortunate. Most Democratic health reform plans include mandated coverage, and that’s a mistake on both policy and political grounds (although the Edwards plan offsets that somewhat with some interesting use of public insurance).

The Las Vegas Democratic debate was long on play-acting, short on substance. Meaningful exchanges about policy were hard to come by, and only three come to mind: Clinton vs. Obama on Social Security, Clinton vs. Obama on health mandates, and Clinton vs. everybody on her Iran vote.

Re health mandates, Obama may well be on the right track. When Clinton boasts, as she did last night, that her plan provides universal healthcare, what she’s not saying is that it does that by punishing people who don’t pay usurious prices to private companies in order to obtain coverage. Obama had the right response, althouch he expressed it in a passionless and somewhat detached way.

The New York Times is correct when it says that “many experts agree that that without a mandate, some people would not get coverage.” In addition, a voluntary enrollment plan will suffer from “adverse selection”: The sick will be more likely to enroll than the healthy, which will make the plan financially unstable.

But I disagree with many of my fellow “health wonks” on mandates. I’ve said they’re the wrong solution. They address the “selection” problem, but only partially. Compliance will continue to be a problem under the “mandate” approach unless fairly Draconian enforcement rules are put in place. (That’s what Obama was alluding to with his “garnishing wages” comment, which many viewers may not have understood.)

Secondly, mandates could become a political disaster. They could turn a Democratic political positive – public frustration with healthcare – into a negative. It’s easy to picture the Republican candidate talking about “nanny state” rules that “invade your privacy and seize your wages.”

No health plan will succeed if it forces Americans to overpay for insurance, on the hope that selection issues and other initiatives bring prices down in the future. It makes more sense to provide every American with a basic government-funded health plan. From there, policy options might include trading plan credits for enrollment in a private plan, or the purchase of supplemental private insurance.

But mandating that Americans buy insurance from private companies is a political and policy mistake. It’s true that mandates are the conventional wisdom today – but then, so was the wisdom of Massachusetts’ mandate-driven health reform initiative. We disagreed then, and said that the “Massachusetts miracle” would have serious problems. It now appears that – sadly – we were right (see here and here and here).

It remains to be seen whether mandates are a “feature” or a “bug” in the Democratic platform.