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Revisiting the individual mandate

Back in August, I made the argument that the individual mandate was the linchpin of health care reform. It wasn’t my idea or anything, I’d just read a lot of blog posts and articles on health insurance that led me to that opinion. I’m still sure that I’m right about it.

In a column Friday arguing that Congress should pass the health care reform bill, Paul Krugman succinctly explains the necessity of the individual mandate:

So what’s the answer? Americans overwhelmingly favor guaranteeing coverage to those with pre-existing conditions — but you can’t do that without pursuing broad-based reform. To make insurance affordable, you have to keep currently healthy people in the risk pool, which means requiring that everyone or almost everyone buy coverage. You can’t do that without financial aid to lower-income Americans so that they can pay the premiums. So you end up with a tripartite policy: elimination of medical discrimination, mandated coverage, and premium subsidies.

The very same trends that are driving Medicare costs upward are eroding employer-funded health insurance. If nothing changes, Medicare will have to be dismantled before it bankrupts the federal government, and employers across the country will be forced to drop health insurance as a benefit. If we allow things to reach that crisis point, any solution we implement will be worse than the partial solution this health care bill provides. The bill isn’t perfect, but it’s a place to build from. The status quo is not.

The other day, Ezra Klein posted a graph created by the Commonwealth Fund that showed how the health care reform proposed by Richard Nixon, Jimmy Carter, and Bill Clinton would have affected the growth in health care spending had they been enacted. All of them would have saved trillions of dollars. Passing this bill now instead of doing nothing will save us trillions of dollars. And tens of millions of people who would otherwise be uninsured will have health insurance. At this point the options are to pass this bill, or to do nothing. The idea of doing nothing is unthinkable.

Update: This Ezra Klein post is worth a read, Who does health-care reform help?

18 Comments

  1. fingers crossed — by this time tomorrow night we’ll be celebrating.

  2. First of all it’s not constitutional.

    The problem with the mandate is that it forces the young and healthy to pay a wildly disproportionate share of the costs relative to what they use to subsidize the old and the unhealthy (many of them lazy/bad health habits). This is because the ratios between what an old/unhealthy person pays vs what a young/healthy person pays will be artificially restricted. Actuarial tables go out the window. Particularly bad for young males. Do we force a safe 40 year old driver to pay nearly the same auto premiums as a 17 year old male driver with numerous tickets? NO! There will also be bloated minimum coverage requirements. Like asking someone who drives a Ford Escort to pay at the level of a BMW. The mandate will really screw those that make too much money to qualify for subsidies but too little to afford the forced monthly premiums. In Mass, many workers right over the subsidy threshold have scaled back their hours to qualify for subsidies. A race to the bottom and a disincentive to work harder. Awesome! Being relatively young and healthy, if my premiums artificially rise too much, I’ll opt out and pay the fine. After all, it makes economic sense because now insurers will have to cover preexisting conditions. If the fine is too high, I’ll be forced into the pool but I’ll feel compelled to over-utilize the healthcare system to at least get some benefit out of it.

    I could go on for pages but wont.

  3. Your argument is essentially that universal health care is a bad idea. I’d be more sympathetic if it didn’t seem to be working out OK for every other developed country in the world.

  4. It hasn’t worked out OK for every other developed country in the world. 10 minutes of internet research on that topic will be quite eye opening for you.

  5. Section 8 – Powers of Congress: The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States;

    Sounds pretty constitutional to me.

  6. This is BAD! Congress just gave the federal government the authority to fine you if you dont buy a product THEY deem you NEED. I support the provisions in the bill pertaining to pre-existing conditions and children but the individual mandate sets precedent for malicious intent as well. THIS IS NOT A TAX!!!! We dont pay taxes to insurance companies!! The penalty is a tax. How would you feel if Bush passed a law forcing everyone to buy OnStar for their house so they could make sure there are no terrorists in the neighborhood? It is for the general welfare of the country right? WRONG! You should not give up liberty for your preferred useless political party. There is an easy way to help the ones who WANT or need help without individual mandates. MEDICARE as an OPTION. Its a tax. And if I dont want it I dont have to have it. Universal anything is BAD. Dems and GOP are stripping your rights away from opposite sides. Republicans take your privacy and democrats take your liberty.

  7. Oh yeah. The other countries that have “Universal Insurance” don`t have an individual mandate. Its paid through tax revenue. AND in those countries it is more of a single-payer system. Private insurance is available for those who can afford it. This plan is modeled on the Massachusettes health care system implemented by Mitt Romney. This is NOT NOT NOT comparable to England or Canadas insurance systems. Massachusettes IS suffering from long waits to see a doctor and premiums are still increasing but the government is absorbing a portion of the increases so the general public only gets modest yearly increases.

  8. You can’t have most of the good things in the bill (coverage for pre-existing conditions, for example) without an individual mandate of some kind. I would prefer a system where the government just provides health insurance for everyone, but that’s a political non-starter (for now). So the individual mandate enables us to reap many of the benefits of universal health care without eliminating private insurance (a political requirement). It’s not perfect, but it’s better than the status quo. I think the liberty arguments are overblown.

  9. Liberty arguments seem overblown until they infringe on YOU somehow. Wait until the next Republican government gets elected. They will use this precedent to make everyone start a private retirement plan. They will say social security is no longer solvent due to the retired baby boomers. They will continue to pay existing recipients only, then gradually phase out social security all together. Dont worry though, your money is safe in the stock market. I know. This could NEVER happen. The funny thing is. Most conservatives would think this is a good thing. My state already had preexisting conditions laws without any mandate. Look it up. RI. However thats probably why there are only 2 onsurance companies here. I am certainly not a right winger but I cant support this. Freedom must come first. To me this is no better than the Patriot Act (which is also unconstitutional). And this can and will lead to other mandates YOU may not be willing to swallow. It seems like congress was more concerned with proping up insurance companies while getting a fake victory for the useless Democrats than REAL reform. There are still private insurers in England. Only the wealthy can afford it but they are there. NOT us we need to make sure everyone buys PRIVATE insurance. Change I can believe in. All I will have left is spare change.

  10. I get what you’re saying, but I don’t agree with it. It’s better than the status quo, and it was this or the status quo. Anyone who really doesn’t agree with the individual mandate can pay the tax to avoid having health insurance. My suspicion is that most people (who don’t already have health insurance) will choose to carry affordable health insurance.

    And I looked at the Rhode Island laws on health insurance, and they are not the same as the new federal law. The protections are much weaker.

    http://www.ricancercouncil.org/health/insurance/hcpri.php

  11. Do you not agree or not really care much? If you don’t agree, with which parts? Do you not agree that mandates could be used for something else? I don’t see this as a stepping stone to a England type system. Democrats had a filibuster proof majority and we got this. This could have passed when clinton was president. This is historic in title only. Kennedy did not fight for this. Even Nixons plan was better than this. Too bad party politics got in the way of that one.

    The RI laws are not the same as the federal laws especially for individuals not in a group plan. But it does demonstrate that you don’t NEED an individual mandate to cover preexisting conditions. If this corrupt state can manage to do this, I would expect the fed to be able to grant the same protections as the new law without mandates. They just don’t want to. They had to make sure the insurance industry and the pharmaceutical industry were happy too.

  12. Let’s see:

    1. Mandates are used for all kinds of things, already. The government mandates that you have auto insurance if you want to drive (not in Rhode Island, I know, but check out their auto insurance rates compared to everyone else’s).
    2. I don’t think we’ll ever have a system like the one in England here. I’m OK with that. I’d take Canada’s. I do think that this system will improve over time. As long as health insurance is good, affordable, and universal, I don’t really care whether it’s offered by the government or through private insurers. Canada has government insurance, Switzerland has private insurance. Both work just fine as far as I can tell.
    3. I wish this type of system had passed in 1994. We’d be better off than we are right now.
    4. It is certainly true that enough legislators don’t want to put the insurance companies out of business to prevent a bill that would put them out of business from passing. So the best we could realistically accomplish was to move toward universal coverage by way of an individual mandate. The health care reform bill that was passed and signed beats the crap out of the status quo, and is worse than the ideal health care system. What I’m most interested in is improving on the status quo.
  13. My concern with this bill is simple. Costs. Very little the government does comes in under budget. Medicare is breaking the bank. Social Security is breaking the bank. I see very little in this bill that will control health care costs.

    The high cost of health insurance is a symptom, not a root problem. The problem is the high cost of health care. If the Democrats were serious about making health care more affordable, there would be a lot I would like about HCR. However, they seem to be focused on giving away free or subsidized health insurance which is going to do very little to bring down the cost of care and it may even further increase costs.

    I would love to see the status quo improved by making the health care market more open and transparent. Price fixing is legal and rampant. Certificate of Needs laws limit competition. State governments have tight control over the number of new doctors entering their state. Medicare is rife with waste and fraud. The medicare fraud is the only thing that this bill tackles.

    That’s just my $0.02 worth. Folks who harp on the status quo know that no one wants the status quo, they just don’t want to start up another entitlement that will bust an already strained budget. $13 trillion in debt, deficits as far as the eye can see…and we are taking $1 trillion worth of money out of the hands of the people and giving it to the politicians. That is not a prescription I want to take.

  14. RI does mandate auto insurance.I think since 92 or 93. It is expensive but because of the crooked insurance commissioner not necessarily because of any policy.

    I have less of an issue with auto insurance because the insurance is required to register a vehicle to drive on public roads. States have the right to regulate the registration on your vehicle. As well as revoke your license and require submission to breathalyzer tests and whatnot. This is more like imposing a fine for not owning a car.

    By doing anything universal, your forcing everyone to do whatever you do. Even if a huge majority of the people want something it should not be imposed on everyone. Look at what happened with the gay marriage referendum prop8 in CA. I’m sure some, maybe even a lot would love to see a universal marriage law.

  15. Jeff What do you propose we do about medical costs? Not insurance costs. But health care costs? Are we supposed to set wages for doctors? Then we’ll have less docs than we do now. I know some hospitals have way too many executives making way too much money for doing not much. Medical imaging devices are expensive and will get more expensive as technology progresses. I see no way to reduce the costs of medical care. I don’t think tort reform would even help much. I agree completely with the idea of being able to shop for insurance out of state.

    As far as the debt goes. Free Trade is the biggest problem. If we would impose some heavy tariffs on imported goods (even the ones from american companies abroad)we could reduce the debt. It would also lead to a more competitive US market. If the stuff made here was sold at a more competitive price point, we would have more jobs as companies are not so eager to leave. I’m saying inflate the costs of imports, not reduce the costs of domestic goods. Keep manufacturing alive.

  16. I too worry about costs, a lot. I could be wrong but I see greater government involvement as the only thing that will actually reduce costs across the board in the long run. Once government has made the promise that everyone will have health insurance, we have to figure out how to keep that promise. People (rightfully) have an aversion to tax increases, so that means spending less on health care, like everyone else in the world does. People in other countries go to the doctor more than we do, live longer than we do, and spend less on health care than we do. The existing system of employer-funded health insurance is doing zero to arrest growth in costs. My hope is that making it a public problem will lead to some more robust solutions.

    We shall see. Our day of reckoning with cost growth is coming, one way or the other.

  17. Rafe, a good place to start would be getting rid of employer funded health insurance. Of course, the only reason this became the dominant model is due to government intervention in the labor market during WWII.

    When doctors and patients don’t care what a procedure costs, you will never contain costs.

  18. Nobody has a real solution to medical costs because there are none. Don’t worry we can borrow the money from our parent company. China.

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