One of the many things that drew me to Barack Obama during the 2008 Campaign was his opposition to an individual mandate. (Hilliary if you remember, supported one). All that meant to me was that Heidi was gonna be made to buy Health Insurance, and I wasn't down with that.
Now, I've since learned...since watching the Health Care debate is that then-Senator Obama was wrong about the Individual Mandate, and so was I:
Erza, thus, presents the reasons:
The importance of the individual mandate
Markos Moulitsas explains his opposition to the Senate bill, and says it all comes down to the individual mandate. "Strip out the mandate," he says, "and the rest of the bill is palatable. It's not reform, but it's progress in the right direction. And you can still go back and tinker with it at a later time."
I'm sympathetic to his thinking. This was, of course, Barack Obama's position during the 2008 campaign, and it led toarguably the most bitter policy dispute in the race. But after winning the presidency, the Obama administration flipped on it, and they were right to do so. Here's why.
Pick your favorite system. Socialized medicine in Britain. Single-payer in Canada. Multi-payer with a government floor in France. Private plans with heavy public regulation in Sweden, Germany and elsewhere. None of these plans are "voluntary." In some, there's an individual mandate forcing you to pay premiums to insurance companies. In some, there's a system of taxation forcing you to pay premiums to the government. In all of them, at least so far as I know, participation is required except in very limited and uncommon circumstances. And there's a reason for that: No universal system can work without it.
Holding the price of insurance equal, insurance is gamble on both sides. From the insurer's perspective, it's a better deal to insure people who won't need to use their insurance. From the customer's perspective, it's precisely the reverse.
Right now, the insurer sets the rules. It collects background information on applicants and then varies the price and availability of insurance to discriminate against those who are likely to use it. Health-care reform is going to render those practices illegal. An insurer will have to offer insurance at the same price to a diabetic and a triathlete.
But if you remove the individual mandate, you're caught in the reverse of our current problem: The triathlete doesn't buy insurance. Fine, you might say. Let the insurer get gamed. They deserve it.
The insurers, however, are not the ones who will be gamed. The sick are. Imagine the triathlete's expected medical cost for a year is $200 and the diabetic's cost is $20,000. And imagine we have three more people who are normal risks, and their expected cost in $6,000. If they all purchase coverage, the cost of insurance is $7,640. Let the triathlete walk away and the cost is $9,500. Now, one of the younger folks at normal cost just can't afford that. He drops out. Now the average cost is $10,600. This prices out the diabetic, so now she's uninsured. Or maybe it prices out the next normal-cost person, so costs jump to $13,000.
This is called an insurance death spiral. If the people who think they're healthy now decide to wait until they need insurance to purchase it, the cost increases, which means the next healthiest group leaves, which jacks up costs again, and so forth.
Kill the individual mandate and you're probably killing the bill, too. The mandate is what keeps average premium costs low, because it keeps healthy people in the insurance pool. It's why costs have dropped in Massachusetts, not jumped. It's why every other country with a universal health-care system -- be it public or private -- uses either a mandate or the tax code. It's why the Obama administration flip-flopped.
But maybe you're willing to ditch universality. Add some subsidies, leave the mandate, and it's a step forward, right? At least until the project is consumed by an insurance death spiral? And Congress will surely do something to stop that, right? Well, maybe.
Kill the individual mandate and you make it easy for Congress to let the country backslide to its current condition. In a world with an individual mandate, insurance has to be affordable. If it's not, there's a huge political backlash. That gives Congress a direct incentive to focus on cost. Remove the individual mandate and ... eh. If insurance isn't affordable, people simply go uninsured. It's exactly what happens now. Same incentives, or lack thereof, to make the system better.
In his post, Markos says the bill lacks "mechanisms to control costs." I'd disagree with that, pointing to the bundling, MedPAC, the excise tax, the possibilities of a competitive insurance market, and more. The bill doesn't do enough, but it does more than anything we have ever done before. But put that aside for a moment. As Atul Gawande argues, there's no Big Bang of cost control. The public option wouldn't have done it, and nor would Medicare buy-in. It's a process. And this bill, in large part through the individual mandate, creates that process.
The key to cost control is a politics that forces Congress to make the hard decisions that lead to cost control. Right now, the ranks of the uninsured grow, the cost of insurance rises, and Congress can pretty much ignore the whole thing. The individual mandate controls average premium costs, but more than that, it is the political mechanism for cost control. Kill it, and you've killed our best hope of making the next reform better than this one.
