In humble attempt at casting this in the tradition of Socrates, a (slightly altered) quote:

"The unexamined vote is not worth casting."

Sunday, December 23, 2007

To Mandate or Not to Mandate Health Insurance Coverage

Yesterday, I reposted a piece I wrote on a potential weakness in Obama's health care plan here on Daily Kos, and received some helpful responses back (by the way, the Daily Kos site is quite key, allowing anyone to post, be rated by readers, and gradually move up in position on the site; the readers are engaged, and many quite knowledgeable, as I found with this issue; lots of well-known names and staff writers also post on the home page, offering a neat combination of seasoned and grassroots commentary). Yesterday though, some who read my piece responded by telling me about some rebuttals by former Secretary of Labor under Clinton, Robert Reich, to the criticisms of Obama's lack of a mandate in his health care plan. He makes some good points. The article I was noting in that post, by Paul Krugman at the New York Times, is apparently one of a number of pieces Krugman has done that, in Reich's view (here), are being given too much coverage on the NYTimes editorial page, and are overly critical of Obama.

I'll just recap the issue here though, concerning mandates, restating what I understand of Krugman's perspective, and then note the basics of what Reich says in opposition. So John Edwards and Hillary Clinton's health care plans include mandates that require everyone to get health insurance, whereas Obama's does not. This is the origin of the claim you may have seen in the Las Vegas debate, and elsewhere, where Clinton said Obama's plan was not universal, claiming it would leave
out 15 million people. She was referring to the idea that without mandates, some number of people would forgo coverage (because either they would not feel they needed it, or they could not afford it). In the NYTimes piece I was writing about before, by Krugman, he claimed that, without mandates, "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." This struck me as a valid point, because, as Krugman also points out, "Mr. Obama’s plan, like those of his rivals, requires that insurers offer the same policy to everyone." That is, many would be paying X amount of dollars per month for insurance, likely getting some preventive care and thereby avoiding higher-cost emergency room visits; however, since others would be avoiding paying altogether, not getting preventative care, there would be more situations where they had to get expensive emergency care--and there's the rub, since under all the frontrunners' plans the insurance companies would have to offer the same policy to everyone, those individuals waiting until they absolutely needed care would come in at that point and pay the same as everyone who got it earlier, but cost the system more because

Reich, on the other hand, says here that, upon his close inspection, Clinton's plan does not provide enough money up front to subsidize those who cannot pay for care, and that on that basis, her plan would actually cover less people than Obama's. In another short piece, he says that, in the end, the issues of mandates is not that important, because "all their plans would cover a large majority of those who currently lack insurance." Similarly, he holds that mandates are "relevant to only around 3 percent of the population," just under the 5 percent, or 15 million, that Clinton claims will be left uncovered by Obama's plan (although, again, Reich is claiming that Clinton's would actually cover even less, because of the subsidy issue). It's a little hard for me to understand how they actually know that the number would be that small, however both sides are claiming it (even if Clinton's camp is only pointing to Obama's as the plan that would leave that many out). Lastly though, Reich also makes an interesting point about how mandates would be less attractive to Americans because they "conjure up a big government bullying people into doing what they’d rather not do."

That is where I will stop with this post however, to avoid too-long-posts, and also because it offers a good, clean segue into the next question of whether the government should bully people into doing what they'd rather not do--not just with mandates though, but with a full-fledged single payer health care system. I honestly do not know if it is politically viable, but am quite drawn to the single payer idea of ousting the middle man (insurance companies), and will explore these questions a little more in another piece soon.

Other helpful resources on this subject:

-For a piece from Newsweek about how Krugman (and his supposed candidate Edwards) need to be able to work with opposing parties more on issues such as this, as the author claims Obama is able to, go here; somewhat conversely however, for a piece that seems to imply that Obama may have compromised too much with health insurance companies and lobbyists while in the Illinois state Senate (although it's hard to know what to think about it), check out this Boston Globe article.

-
For an argument against arguing about mandates altogether at this point in the process, see this short piece by Henry Aaron of the Brookings Institution.

Update: I just found an especially video of Barack responding to this issue in Iowa, where he also mentions that the Clinton camp, as noted by Reich in one of the above pieces, claims that the majority of those who would need to be forced to have health coverage via a mandate, are the young and healthy. Obama says in this video that he accounts for that by requiring that insurance companies allow kids to stay on their parents' plan until they are 25. Here is a link to the video.

Update 2 (1/31/08): Another follow-up here from Robert Reich, former Secretary of Labor in the Clinton Administration, on the idea of health insurance mandates. In this post, he discusses how the issue simply is not significant enough to make it a deal-breaker. He says at one point:

"A mandate may not make much difference anyway. Columbia University professor Sherry Glied and her colleagues investigated health-insurance mandates now in place in Switzerland and the Netherlands. They report in the November-December issue of Health Affairs that mandates can, but don't always, increase coverage. Whether they do depends on the cost of complying with them and the penalties for not doing so. Overall, they found, the effects of mandates largely reinforced existing high levels of coverage. Switzerland now enjoys near-universal coverage, but this reflects only a tiny increase over the rate of coverage before it was mandated, when over 98% of population had mostly voluntary coverage (emphasis added)."

He goes on, and I've just categorized a few of his responses with my own words in italics:

How would this aspect of Obama's plan specifically differ from the others?

"Take a closer look and even the candidates' positions on mandates aren't all that different. John Edwards has proposed to automatically enroll people in health insurance on their tax returns, but has said this mandate won't apply until premiums are affordable. Hillary Clinton says she favors mandates, but isn't sure there should be a penalty for noncompliance. Barack Obama favors an immediate mandate for children, but doesn't include one for adults. He says he's willing to revisit the issue after making health insurance more affordable and enrollment easier, and is also considering an automatic enrollment with an opt-out for those who don't want to be included (emphasis added)."

On considering a mandate later, and only if necessary:

"As a practical matter, the difference between Sen. Clinton's and Sen. Obama's approaches come down to timing and sequencing. Mrs. Clinton wants a mandate first, believing that enrolling the younger and healthier will help reduce costs for everyone else. Mr. Obama thinks forcing people to buy health insurance before it's affordable isn't realistic. He wants to lower health costs first, and is willing to consider a mandate only if necessary."

Who might a mandate apply to?

"This fight is little more than a distraction, given that a mandate would matter only to a tiny portion of Americans. All major Democratic candidates and virtually all experts agree that the combination of purchasing pools, subsidies, easy enrollment and mandatory coverage of children will cover a large majority of those who currently lack insurance -- even without a mandate that adults purchase it. A big chunk of the remainder are undocumented immigrants, who aren't covered by any of the plans. Who's left? Only around 3% of the population. So the question they're really battling over is whether it's better to require this 3% to buy insurance, or lure them into buying it with low rates and subsidies."

Who is in that 3% of those who would potentially be mandated by Clinton to get coverage?

"The answer depends on who's in this 3%. Mrs. Clinton thinks they're mostly younger and healthier than the general population so they should be required to buy health insurance. That way, they'll bring costs down for everyone else because their payments will subsidize the others. Mr. Obama thinks a lot of them are people who won't be able to afford even the subsidized premiums, so they'd either ignore a mandate or wouldn't be able to pay for it. He says if his plan gets 97% coverage without a mandate and he finds that the remaining 3% are mostly young and healthy, he'll go along with a mandate."

On Massachusetts' experience with mandates:

"Who's correct? It's hard to know. So far, the Massachusetts experiment suggests Mr. Obama. Massachusetts is the only state to require that every resident purchase health insurance. The penalty for failing to do so could reach $4,000 next year, but the state has already exempted almost 20% of its current uninsured from the requirement. Massachusetts is concerned they can't afford a policy, even with subsidies similar to those in all the Democratic plans. So far, about 50% of Massachusetts's uninsured have complied with the mandate."

Finally, to return to the beginning of his post, he points out that:

“Democrats should be celebrating. Their three major candidates have put health insurance front and center on the domestic agenda, and with plans that are remarkably similar. They've done so at a time when the public seems readier than ever before to embrace universal health insurance, and readier to trust a Democratic president to put it into effect.

But instead of celebrating, the candidates and left-leaning pundits are squabbling over whether the plans should include so-called mandates that require everyone to purchase health insurance. Talk about self-inflicted wounds. Mandates are a sideshow, and fighting over them risks turning away voters from the main event.

In almost every important respect, all major Democratic plans are the same. They require employers to "play or pay" -- either provide coverage to their employees or contribute to the cost of coverage. They create purchasing pools that will offer insurance to anyone who doesn't get it from an employer. They offer a public heath-insurance option. The plans preserve freedom of choice of doctors. They aim to save money through more preventive care, better management of chronic disease, and standardized information technology. All of them subsidize lower-income families.

Despite some skirmishing over whose subsidies are most generous, the subsidies are about the same. The major Democratic plans would spend nearly an identical amount of money helping low- and middle-income families because they rely on the same source of general revenue, derived from allowing the Bush tax cuts to expire. Given the myriad ways universal health insurance might otherwise be organized -- single payer, employer mandate, health-insurance vouchers, tax credits -- this Democratic consensus is striking. It also highlights the abject failure of Republicans to come up with any coherent plan.”

Update 3 (1/3/08): The information keeps pouring in on this issue, thus the third update here. As posted here on the Obama site, 80 "health care and legal experts" weighed in on this with a letter signed by all of them; a quick glance at the signers listed at the above link shows the list is dotted with health policy professors from myriad prestigious schools, including many from Harvard and Yale, among others. Here is a particularly poignant quote: "There is simply no factual basis for the assertion that an individual mandate, by itself, would result in coverage for 15 million more Americans than would robust efforts to make health care more affordable and accessible. The inaccurate claim that an individual mandate alone would reduce the ranks of the uninsured by 15 million draws attention away from the challenges we must surmount to make good medical care available to all." And then here is a longer excerpt:

"The remarkably similar health plans proposed by Senators Clinton and Obama have the potential to reduce the number of uninsured Americans (citizens, permanent residents, and others lawfully present in the U.S.) to two percent or less of the population. Achieving this goal would require full implementation of these plans’ subsidies and insurance market reforms, plus robust outreach efforts to get everyone to sign up for coverage.

The necessary outreach will not be easy, and it will be fruitless unless health insurance is made affordable and accessible to all. Some believe that an individual mandate to buy health insurance should be part of this effort; others hold that a mandate would be paternalistic or too onerous for families at the margins of affordability. Regardless of our feelings on this issue, what is clear from the evidence is that mandates alone, without strong incentives to comply and harsh punishments for violation, will have little impact on the number of uninsured Americans. Indeed, as the Massachusetts experience illustrates, non-compliance with mandates is a large problem, absent harsh sanctions. There is simply no factual basis for the assertion that an individual mandate, by itself, would result in coverage for 15 million more Americans than would robust efforts to make health care more affordable and accessible.

The inaccurate claim that an individual mandate alone would reduce the ranks of the uninsured by 15 million draws attention away from the challenges we must surmount to make good medical care available to all. These challenges include adequate public subsidies, insurance market reform, outreach to people at the margins of American life, and long-term control of medical costs. Individual mandates may have a role in health care reform, but there is risk of a specious “Mission Accomplished” moment. It is a time for rolling up our sleeves and addressing the hard work required to get everyone care. The central challenge is to make health insurance affordable and accessible, and to reach out to all Americans to help them obtain coverage. Voters should insist that candidates for president address these very real issues."

2 comments:

Mark said...

While you are obviously on the political left, you may still want to check out this Greg Mankiw post:
http://gregmankiw.blogspot.com/2007/12/on-health-insurance-mandates.html

The point is that mandates only work if the average cost of the penalty is sufficient to scare people into buying insurance they otherwise would not buy. Since no one is advocating jail time for people who refuse to buy insurance, this means that the penalty is nothing more than a financial incentive to get insurance.

In this way, the penalty is no different from a credit for obtaining insurance. The problem with Krugman's argument is that it falsely assumes, much as Republicans falsely assume with morality legislation, that you can legislate behavior completely out of existence. All you can do is create incentives and disincentives for behavior, and there is no fundamental difference between a $1000 incentive and a $1000 disincentive.

Bottom line: Krugman's continuing attacks on Obama's lack of mandates in his proposal are utterly baseless.

Although I am a libertarian and could not disagree more with Reich on most issues, it seems to me that Reich has supplanted Krugman as the most trustworthy authority on Progressive economics. Krugman has devolved into a shell of his former self.

Brendan said...

Thanks for the comment Mark, and for the Greg Mankiw link.

With that, and your related comments, I hear you on a number of fronts. Upon further thought, I think it is unproductive and inefficient to have penalties that do anything other than pay right into an insurance plan (which seems it may be what you're suggesting if there were to be any mandates), if we're talking about systems like the Democratic frontrunners' plans. Otherwise it seems unnecessarily punitive.

Also, the point of the mandate is what? To say, "you need coverage," right? However, in the case of a mandate that did not pay directly into a health insurance plan for the "violator," we end up with someone who has X amount of dollars less for insurance, because of the fine, and still no insurance (thus risking costing the system more in the long run by not getting preventive care, etc.).

Do you, or does anyone out there, know if any of the systems purport to work in that way? In terms of your point (along with Greg's) in terms of incentives and fines being similar (or equal), that makes definite sense. I'm still not entirely convinced that mandates would not be helpful (as Obama apparently leaves the option open too), because of the feeling that it could work in the above way I mentioned, but also because I'd like to hear more about ways that they could be enforced (as Krugman mentions, "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."--seems potentially like it could work, depending on details).