Wednesday, February 27, 2008

Health Insurance Mandates

At the Volokh Conspiracy, Russell Korobkin, an Obama supporter, criticizes Hillary Clinton's call for health insurance mandates.
Full disclosure: I am an unpaid member of a health care policy advisory committee for the Obama campaign, but I personally favor individual mandates as part of comprehensive health care system reform.
That apparently means that he supports mandates for the right reasons, while Hillary supports them for the wrong reasons. (But he doesn't tell us what his reasons are.)
Clinton alleges that, simply because it includes a mandate, her plan would lead to universal health insurance while Obama's would not. This is not true.
Well, yes, it is. If mandates exist and are effectively enforced, you have universal health insurance. If they don't exist, you won't. Speaking about how Obama's reforms could make health insurance more affordable, and sharing a dream that everybody may voluntarily buy affordable health insurance? That's fine, but he admits, "[Obama] is open to mandates down the road if, after the reforms and subsidies reduce costs, a large number of healthy "free riders" still do not buy coverage". Either way, we end up with mandates. The question in a sense becomes, will reforms make health insurance more affordable in the absence of mandates? I think, there, the Clinton camp is being far more realistic - if you let people wait until they require health care to buy insurance, you will drive costs up.
Clinton wants to require all Americans to purchase health insurance, but she refuses to describe how she would enforce such a requirement.
Okay... And Obama is open to mandates if people don't voluntarily buy health insurance, "but [he] refuses to describe how [he] would enforce such a requirement". This is what we call "election year politics".
What makes Clinton's criticism of Obama really off the mark, though, is that she is trying to market mandates as a benefit for the large number of currently or potentially uninsured Americans, when mandates actually are a concession to constituencies that otherwise might favor the status quo against attempts to make insurance more affordable. Auto insurance mandates are good for the people who might be hit by an uninsured motorist, but they are hardly welcomed by the uninsured who feel, rightly or wrongly, that they can't afford coverage. Similarly, health insurance mandates are good for people with insurance, employers who would be forced to pay into an insurance pool, and private insurers who would face greater regulation under a reform plan, because expensive subsidies that would be required to help the "sick" uninsured to purchase coverage would be at least partially offset by requiring the "healthy" uninsured to contribute their fair share to the system. But telling someone without insurance that the government will force him to buy it at whatever price the market charges is unlikely to convince him that his problem is solved.
As Paul Krugman observed several months ago,
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?

Look, law enforcement is sometimes imperfect. That doesn’t mean we shouldn’t have laws.
Krugman more recently observed,
So the Obama plan would leave more people uninsured than the Clinton plan. How big is the difference?

To answer this question you need to make a detailed analysis of health care decisions. That’s what Jonathan Gruber of M.I.T., one of America’s leading health care economists, does in a new paper.

Mr. Gruber finds that a plan without mandates, broadly resembling the Obama plan, would cover 23 million of those currently uninsured, at a taxpayer cost of $102 billion per year. An otherwise identical plan with mandates would cover 45 million of the uninsured — essentially everyone — at a taxpayer cost of $124 billion. Over all, the Obama-type plan would cost $4,400 per newly insured person, the Clinton-type plan only $2,700.

That doesn’t look like a trivial difference to me. One plan achieves more or less universal coverage; the other, although it costs more than 80 percent as much, covers only about half of those currently uninsured.
You would think that by now Obama's advocates would have updated their argument.

Back to the Obama suppoorter:
To see why Clinton's argument is nonsensical, consider that the country could achieve nearly universal health insurance immediately simply by enacting an individual mandate coupled with a truly draconian penalty for non-compliance. But so what?
This rebuke of Clinton is silly on its face, given that many people do not have health insurance because it isn't affordable, and many others do not have health insurance or are severely underinsured due to pre-existing medical conditions. But even if we pretend that's not the case, the real purpose here seems to be to suggest that draconian penalties would be required to enforce mandates - whether by Clinton today or by Obama down the road (as necessary). Back to Krugman:
Third, and most troubling, 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.
Although you wouldn't get this from Korobkin's post, Clinton has endorsed Edwards' proposed solution.

The silliest part of all is that Barack Obama's refusal to discuss mandates reflects, in my opinion, the politician's instinct to tell the public, "You can have it all - without paying any price at all." Clinton (and formerly Edwards) let people know up front that there is a price to universality - an obvious price - in that everybody must be insured.

Korobkin also skips right over the fact that we presently pay an enormous price to provide medical care for the uninsured and underinsured. Right now, the "subsidy" for that comes from charging higher health care prices to everybody else.

To lambaste Clinton for a lack of specifics on how mandates might be enforced, even while suggesting that Obama recognizes that they are necessary (but won't specify when or how they would be implemented or enforced), is not the way to convince me that Obama has the better plan.

Korobkin ignores Krugman, so I have no reason to believe he would respond to any challenge from me, but I would love to see him detail the "good reasons" to enforce mandates - those which inspire his own support for mandates. I would love to hear him explain how Obama would enforce mandates, with no hedging about how they may not become necessary. For that matter, how he would enforce the mandates that he expressly endorses. There is no such thing, after all, as a voluntary mandate.

Why was this posted at the Volokh Conspiracy, a purported "libertarian" blog? It's hard to guess. Maybe because it is critical of Clinton?

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