Obama Says No One Should Be Forced to Sign up For Insurance; Edwards Says If You Don’t, He’ll Garnish Your Wages—Who is Right?
John Edwards' declaration that under his health reform proposal anyone who refuses to sign up for health insurance will be subject to having their wages garnished has led to a blogstorm of often confusing debates. Under national health reform, should everyone be required to enroll? The Edwards and Clinton plans have mandates insisting that all Americans purchase insurance; the Obama plan has a mandate for children, but not for adults.
New York Times columnist Paul Krugman stirred controversy Friday by defending Edwards, and criticizing Barack Obama: “Under Obama’s health care plan, healthy people could choose not to buy insurance—then sign up for it if they developed health problems later,” Krugman observed. “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.”
On Sunday former FCC Commissioner Reed Hundt called Krugman out here on TPM Cafe in a post headlined “Ease up, Dr. Krugman.” According to Hundt: “The very idea of government mandates directed to individuals evokes a command-and-control model that disturbs citizens who want to enjoy certain freedoms in choosing health care.” His post (below) is drawing many comments--some on point, some muddying the waters.
Because the conversation in the blogosphere has become such a mix of good information, misinformation and false assumptions, I’ve decided to try to spell out, as clearly as possible, why we need a mandate. Very simply, it addresses a serious defect in our health care system: under existing rules, you don’t have to buy insurance, but you can be priced out of the insurance system if you are sick.After examining that problem--and looking at how requiring insurance solves it-- I’d like to answer a sensible question that observers like the Washington Monthly’s Kevin Drum have raised: Why force people to buy insurance? Why not just tax everyone, put the money in a pool similar to the Medicare Trust Fund, and use it to buy universal insurance?
Begin with one of the most serious inequities in our current system. Today, laws in many states, including California, allow insurance companies to refuse to cover anyone applying for an individual policy who suffers from a “pre-existing condition”--including common conditions such as asthma or pregnancy. As a result, if a person loses her group coverage—either because she changes jobs or because her employer no longer offers health benefits—and then discovers that she’s pregnant, she may find that she is uninsurable.
Moreover, even if you manage to secure coverage, in many states the insurer can jack up your premiums if you become sick and actually begin using your policy. A small business also may find itself penalized if one or more of its employees become seriously ill; in some cases employers have had to cancel insurance for the entire group because they couldn’t afford spiraling premiums.
In addition, the Los Angeles Times reports (see a 1/08/07 story by Lisa Girion, available by subscription), in states like California private insurers can –and do—refuse to insure entire categories of workers who they deem “too risky” to cover, including roofers, pro athletes, dockworkers, migrant workers and firefighters , even if they are in good health and can afford coverage. The LA Times looked at confidential underwriting guidelines of three health plans: Blue Shield of California, PacifiCare Health Systems Inc. and Health Net Inc. which all said that “actuarially speaking,” certain workers pose too big a risk.
A last resort for people turned away by the private market is a state's high-risk pool, in which the state assumes the financial risk while paying private insurers to administer coverage. But in California, enrollees must lay out as much as one-third of their income on monthly premiums that cost up to $796 (see 12/21/06 story by Lisa Girion, also in the L.A. Times). Meanwhile, annual benefits are capped at just $75,000. If your child is diagnosed with cancer, it’s likely that you’ll run through that $75,000 in less than six months. Then what do you do?
In each case, insurers are penalizing people for being sick, or because it seems likely that they might be injured. Those who most need insurance are excluded. It is one thing to raise car insurance premiums if a driver has a series of accidents (suggesting that he might well be a reckless driver). But most people become sick through no fault of their own, No matter how careful we are, unless we die in an accident, each of us is going to become seriously ill at some point in our lives. We just don’t know when. This is why we all need insurance.
To prevent insurers from shunning the sick, some states, including New York, have passed “community rating laws” which say that insurers must charge everyone in a given community the same price for the same policy, regardless of age or health status. Moreover, insurers are not allowed to hike rates because a business or an individual has made claims.
In states like New York, where community rating applies, no one is left out in the cold. If an individual wants to apply for a new insurance policy, he does not have to report pre-existing conditions. But he does have to show that he was already insured with another carrier; you cannot just wait until you’re diagnosed and then decide you want coverage.
Insurance in New York is much more expensive than it is in California because the pool includes sick people who would have been excluded in California. (The percent of premiums that insurers pay out to provide care is roughly the same in both states. Insurers don’t make higher profits in New York. If anything, they prefer to operate in states like California where they can hope to avoid patients suffering from serious, debilitating diseases).
If you are young and healthy, you might prefer to live in a state like California, where insurance is cheaper—assuming you don’t mind living in a state where your mother can’t get insurance because she has had breast cancer and your best friend can’t afford insurance because she’s a diabetic.
Progressives believe-- rightly, I think-- that most of us don’t want to live in such a society. So the three leading Democratic candidates, including Obama, are calling for community rating. Their proposals for reform offer citizens a choice between public sector insurance (that would be much like Medicare) and private sector insurance, and under their plans, both public and private insurers would abide by community rating, insuring everyone in the community, young or old, sick or healthy, at the same price.
And to make sure that everyone can afford the price, the government would offer subsidies, based on income. Thus, only upper-income twenty-somethings would wind up paying the full price. The subsidies are key. As The American Prospect’s Paul Starr points out:
“The secret power of the mandate is that it is as much a mandate on government as it is on individuals. It is a mandate on government to make coverage available and affordable. For it would be patently unacceptable to demand that people have coverage and then provide no practical way for many people to get it.” But the government (i.e. taxpayers) will be able to afford those subsidies only if the healthy and wealthy participate in the pool.
Why Insuring Everyone Means That Everyone Must Be Insured
If we want community rating, Edwards and Clinton realize that we also must mandate that everyone sign up. Otherwise, no one would buy insurance until they were sick or elderly; then they would enroll, secure in the knowledge that insurers had to cover them, and couldn’t charge them more. Meanwhile, the insurance pool would be comprised mainly of people who are expensive to insure, and premiums would skyrocket.
Put simply, mandates are the flip side of community rating. If you want to say insurance must cover everyone—even if they are suffering from a slow, progressive disease like Parkinson’s—then you have to insist that everyone gets into the pool. This is the only way we can afford universal coverage. If you think about it, this is precisely what Medicare does: no one over 65 is excluded, but everyone—even the young and healthy-- must pay the same percentage of their paycheck in Medicare taxes.
In the end, Harvard economist David Cutler, Obama’s health care adviser, agrees that for national health reform to work, we will need to bring everyone in under the tent. But he says that, rather than forcing people to buy insurance, Obama believes “a better approach is to do everything possible to make it affordable and available. When it is, almost everyone will have it.”
Will everyone sign up? Many young people look in the mirror and feel immortal. Meanwhile, young libertarians just don’t believe that they have a responsibility to help cover others. In Massachusetts, where there is no mandate, over 200,000 of the Commonwealth’s uninsured have refused to sign up. Roughly one-fifth of the refuseniks earn more than $50,000 a year; many are under 35, but choose not to buy coverage even although under the Massachusetts plan, a 27-year-old can buy insurance for as little as $176 a month.
Cutler’s idealism is sincere. He, like Obama, would prefer to soft-sell reform. But it’s telling that, in the interview with Sentinel Effect last Friday. Cutler went on to acknowledge that: “If there are free riders [people who don’t sign up but expect to receive care if they’re in an accident], Obama is open to mandates. . . . He hasn’t ruled anything out. It’s a matter of priorities. The fact is the policy differences on the mandate issue aren’t that large at all. Sen. Obama believes they’re an option down the road, if other approaches don’t work.” [emphasis mine].
In other words it seems that Obama, like Edwards and Clinton, realizes that in the end mandates may well be needed. But right now, Obama is targeting younger voters, and this isn’t what they want to hear.Edwards, on the other hand, says he wants to be honest: “I’m going to tell people what I’m going to do and how I’m going to do it.”
As a matter of political strategy, I would say that Edwards may be honest to a fault. It’s probably not necessary to talk about “enforcement” now.But if Americans want universal, affordable insurance, they need to understand that, to achieve that goal, everyone must help. Insurance, when it works, is all about spreading risks.
Still, when Edwards talks about enforcing the rule that everyone purchase insurance, people like Reed Hundt become anxious. “Could an employer fire an employee for not adhering to a mandate?” he asks. “Could the police arrest those who fail by accident, confusion, or even negligence not to sign up? Could a hospital decline to treat those who did not comply with a mandate?”
The answer is ‘No.’ As Paul Krugman explains, “If individuals don’t have insurance, they won’t be penalized, they’ll be automatically enrolled in an insurance plan. That’s actually a terrific idea,” he adds, “not only would it prevent people from gaming the system [by becoming “free riders”] it would have the side benefit of enrolling people who qualify for S-chip and other government programs, but don’t know it.
”How will the government know whether or not you have insurance? At TNR, Johnathn Cohn has weighed in with a long discussion of just how many people Obama’s plan might leave uncovered—and suggests that one of Obama’s advisers has information showing that under Edwards’ plan, even more Americans would be left “going naked.”
I don’t see how this could be the case. Under Edwards’ plan, every time you come in contact with the government or a health care provider (filing income taxes, enrolling your children in a public school, showing up at an ER or a doctor’s office) you would be asked for your insurance policy number, just as you are routinely asked for your social security number. If you didn’t have one, your name and social security number would be typed into the system, automatically enrolling you in a public sector plan.
Then, if your income is too high to qualify for a full subsidy, you would be billed for your fair share, either as part of the payroll tax you now pay for Social Security and Medicare, or ( if you are self-employed) through your income taxes. (There are, of course people who don’t earn a salary and don’t file income taxes, but the majority are very poor, and would qualify for the full subsidy anyway).
Forcing Americans to pay their share of health insurance may sound Draconian, but again, this is exactly what Medicare does, and very few people object. Yes, the tax takes a chunk out of their paychecks, but the vast majority feel secure knowing that when they are 65, they can count on receiving health care no matter how sick they are. And there is every reason to believe that a public sector program modeled on Medicare would be just as popular as Medicare itself.
Which brings me to Kevin Drum’s question. In Washington Monthly, he writes: “a Rube Goldberg enforcement program like [Edwards’] does nothing except highlight the absurdity of individual mandate healthcare plans in the first place. If you're really this serious about getting every man, woman, and child in the country enrolled, why go through all this? Why not just do it like Medicare, where the funding mechanism is the existing tax system and everyone is enrolled automatically? It amounts to the same thing and it's cheaper, easier, and less intrusive.”
There are four reasons: First, in the recession we’ll be facing in 2009, it will be much harder to persuade Congress to pass a tax increase than it will be to persuade legislators that everyone should have health insurance—just as we now require everyone to sign up for auto insurance.
The second reason is closely connected to the first: many of the taxpayers who elect those Congressmen don’t want to pay taxes into a single Medicare –for-all system. A 2007 poll shows that while 76 percent of Americans favor offering a government subsidized plan to Americans who don’t have employer-based insurance, only 26 percent favor paying more income taxes to expand either Medicare or Medicaid. Seventy-four percent are opposed. In other words, just as in Massachusetts, everyone favors universal care, but the majority of voters do not want to pay higher taxes to support it.
Moreover, as I’ve written recently on HealthBeat the polls also reveal that 80 percent of Americans like the private insurance they have now—or at least they like it better than an unknown alternative. Their main worry is that they will not be able to afford what they have in the future. They do not want to be told that we are all going to be funneled into a brand new government-funded Medicare-for-All System. They want the choice of keeping the devil they know (i.e. their private-sector insurance).
Finally, in order to afford universal health care, we will have to be more careful about wasting health care dollars. This means that we can’t cover every pill or product that someone decides to advertise on TV. All three Democratic candidates have called for independent research comparing just how effective new products and procedures are when tested, head to head, with existing products. (This is something that we don’t do now. A new product can win FDA approval simply by showing that it is better than a placebo).
If we have only a public sector plan, everyone will blame “the government” or “socialized medicine” when they are told “No,” their insurance won’t cover the pink pill that is twice as expensive as existing products because medical research says it is no better.
If we have both public sector and private sector insurance, private insurers will usually follow the public sector’s decisions about what the cover—if they don’t, private insurers will have a very hard time competing on price. Thus, those who fear “socialized medicine” will begin to understand that even private insurers cannot cover every pill, product or procedure that comes down the pike—at whatever price the manufacturer chooses to charge. Premiums would be unaffordable.
Over time, if private insurers are forced to compete with public sector insurance on a level playing field (which means that all insurers offer community rating and that all offer benefits that are, at a minimum, as rich and comprehensive as Medicare), I think that the majority of Americans will wind up picking the public sector plan. The public sector plan should be able to offer better value for our health care dollars because it doesn’t have as many extra expenses: Medicare doesn’t have to return profits to investors; it doesn’t have to advertise and lobby Congress, and it doesn’t pay its executives the seven-digit salaries that for-profit insurers feel they must pay in order to compete with each other.
But right now, many Americans are nervous about health insurance. And they don’t trust government. They need time to decide whether they feel more comfortable with for-profit insurance or a public program. In the meantime, we need to ensure that everyone is covered, and that everyone helps weave the safety net. That’s why we need community rating and mandates. It’s all about solidarity.
Comments (80)
I still don't see the point in saving the private sector participants. You make a good argument that it gives people an option if the government refuses to cover something that they want, but you also say that the privates will likely follow the public example anyway.
If we had a purely public system the private insurers could immediately start in new businesses -- covering things like "drugs of your choice" or even plastic surgery.
I really don't like the idea of the government forcing me to pay money to any private company. It's bad enough with auto insurance. And state government shave done a rotten job keeping auto insurance rates reasonable.
thosethingswesay.blogspot.com
December 4, 2007 1:22 PM | Reply | Permalink
Maggie
Thanks- as usual for a comprehensive sober analysis of this debate. I personally disagree with your comment
Yes Americans are very nervous indeed about health insurance. Yes they don't trust especially the federal government but I posit EXCEPT for an issue like health care.
The sad thing about this mandate vs non-mandate debate is that it diverts us from the "elephant sitting in the health care reform room"- namely cost containment.
If we don't figure out compassionate methods to contain costs all this debate about how health care will be delivered and funded is trivial.
Of course politicians are cirumspect when addressing cost containment because it sounds like denial of treatment and the "R" word= Rationing- which we all know is inevitable.
But someone will have the courage to tell the American people that "more in medicine is not always better" and it is ALL of our best interests to contain costs "yesterday"
Be Well and Thanks again,
Dr. Rick Lippin
http://medicalcrises.blogspot.com
December 4, 2007 1:26 PM | Reply | Permalink
An uniformed populace is not a good reason to support an inefficient plan (private insurance). If people are afraid of the "government" then set up an agency to run the insurance program. People don't seem to be afraid of Medicare even if it is part of HHS.
So let's establish a public, quasi-independent agency (like Fannie Mae was before it was trashed) to handle the paperwork for those not eligible for Medicare/Medicaid.
Using the arguments of practicality and public fear just plays into the hands of the private insurance industry. Take them out of the loop and we save 30%. That should go a long way toward covering those with no income without raising premiums.
The waffling of the Dems and the lies of the GOP aren't helping either. Universal coverage is not "socialized" medicine, but who is countering the propaganda?
Five years ago few believed in global warming, now most do. Education has a value. Liberals should make this the basis of any programs for social change.
--- Policies not Politics
Daily Landscape
December 4, 2007 1:50 PM | Reply | Permalink
I have to tell you that George Bush gave the word "compassion" a bad name. I don't trust the word. What are you talking about?
December 4, 2007 2:17 PM | Reply | Permalink
How can we expect Americans, who are locked into a "what's in it for me" mode, to ever accept a health insurance program that costs them more than they are now paying? It just isn't going to happen. Unless we can somehow build up the altruistic genes in our population we are stuck on this issue.
Of course any universal coverage system would deliver better and less expensive health care for our citizens as a whole. That isn't hard to demonstrate. But, we don't now make decisions based on what is best for our citizens as a whole. We make decisions based on what is best for us personally.
This is why the only politically possible universal health coverage scheme is an expansion of an existing, and well regarded program like Medicare. All it takes is starting by making Medicare effective at a younger age, making it effective for those with children younger than 10, for example, then waiting a couple of years and nudging those limits a bit further.
An added "benefit" for approaching it like this is that it leaves the insurance industry with its Medicare Supplemental insurance as a product. I see this as a win-win program.
This type of program would also work if Medicare covered everyone, but with much higher deductibles for young, healthy adults, for example.
Hoppy in Sacramento
December 4, 2007 2:24 PM | Reply | Permalink
bluebell
I'm talking about individual(health behaviors) AND institutional (public health)prevention and I'm talking about giving people a dignified death like both my parents had in hospice.Not prolonging death which is actually cruel and serves to only add to hospitals bottom $ lines.
Dr. Rick Lippin
http://medicalcrises.blogspot.com
December 4, 2007 3:44 PM | Reply | Permalink
You're overlooking, I think, that people are increasingly realizing that they are only one serious illness or one layoff away from financial disaster. I think there are far more people today than there were 15 years ago who are open to paying a little more now for the assurance that they cannot lose their health coverage or be priced out of the market no matter what happens to them.
December 4, 2007 4:01 PM | Reply | Permalink
December 4, 2007 4:24 PM | Reply | Permalink
Thank you for your comments.
I'll come back and respond in more detail to indivdual comments later.
But for now, let me make a suggestion. Since this post is about mandates, let's talk about mandates!
That said, I reallize that whenever I type the phrase "Private Insurance" many of you feel a need to respond.
It's as if I had whispered the words "public sector" or "govt' run" into the ear of a conservative. I've hit a button and suddenly he or she is off and running, talking about the post office (Would you want health care run by the people who run THE POST OFFICE!.!!!)
(When in fact, the post office does a pretty good job. I've never understood why people are so irrational about the post office. It think it's just one of those conservative memes--touch it and they scream. I've sent and received hundreds of letters and packages over the years and I can't recall one disaster.)
That said, I realize that many of you believe that public-sector insurance (something like Medicare for All) would be far more efficient and provide us with better value than private sector insurance. I AGREE. Completely. Entirely. Always Have.
But in this country, at this time, you and I are in a minority. And I'm interested in getting health care reform that will help the many, many poor and sick people who are now uninsured, even if it's not exactly the plan I would design for them. Moreover, I believe that the plans that all 3 DEmocrats have proposed woudl cause the private insurance industry to "wither away' over time.
How many of you read to the end of this post? Okay, I write long posts. But as you know, I put a lot of time into this, and it's hard to have a conversation with you if you don't read to the end.
Moreover, there is some new information at the end: namely that 80% of the population likes the private-sector insurance they have. For most, it's employer-based group insurance. It's famliar. It's a known. They are not sure how Medicare for all would work. How high would the co-pays and premiums be? (Medicare's co-pays and premiums have been rising steeply) Would it cover acupuncture the way their employer's insurance does? They are clinging to what is famliar.
Please, read to the end of the post, All 3 Democrats are offering everyone the choice between private insurance and public-sector insurance roughly modeled on Medicare. Note to DESTOR 23--no one would be forced to buy private insurance.
Many people might keep the employer-based insurance they have now. But if private insurers were forced to compete with public sector insurance on a level playing field (thanks to govt' regulation,of private insurers, which all 3 Democrats propose) I suspect that over time, many would see that their neighbor who selected Medicare- for- all was getting a good deal and they would switch.
We've talked about private insurance vs. private sector insurance before. More than once. Now we're on to a new subject Mandates. And it's interesting.
Did you know that in N.Y. you can get insurance and not be charged any more than anyone else even if you have cancer?
Did you know that in California, a firefighter could be considered "uninsurable"? Or that if you were pregnant, and not part of a group, insurance companies could refuse to cover you?? OR charge such astronomical premiums that you couldn't possibly afford insurance?
Why do you think Obama isn't calling for mandates? What do you think about Edwards' position?
Read the post: let's have a conversation on a new topic.
Looking forward to hearing from you. mm
December 4, 2007 4:29 PM | Reply | Permalink
December 4, 2007 4:35 PM | Reply | Permalink
I think we have to stop being intimidated by being in the minority. When did that ever stop the lunatics on the right from pushing their agenda? The squeaky wheel eventually gets heard.
I have some trouble with the selectively coercive nature of mandates. All those better off folks who are already insured by having better jobs at better employers escape the coercive mandate. It's just Joe Six (Sick) Pack who has no employer benefits and finds himself confronted with a new cost in the mandate. He's as likely to resent it as appreciate it since he knows those with employer benefits aren't facing the coercion. In a sense, there's a new "tax" but only those most vulnerable have to pay it.
December 4, 2007 4:52 PM | Reply | Permalink
I really don't like the idea of the government forcing me to pay money to any private company.
In the plan described here, the government wouldn't be forcing you to pay money to a private company. They would be forcing you to pay money to the government for public insurance IF you didn't already have privacy insurance. Its only if you don't have insurance at all that they will automatically enroll you for the public insurance Keeping the private sector participants around is so those who like their privacy sector insurance can keep it.
I disagree that most people will eventually move to public insurance. If you have insurance, most of the problem with the health care system is the hassle - the bureaucracy and paperwork. If Medicare is any judge, the public-sector system will have errors aplenty. If I am on the public sector system, then I have to complain to the government. If I am on an employer based private system, then my employer (who is a lot bigger than me) is complaining to another company, and will get a lot farther.
December 4, 2007 5:18 PM | Reply | Permalink
Ms. Mahar, I'm so ANGRY at you for continuing to push this mandate NONSENSE that I can't even begin to tell you. But I'm gonna tell you this.
A month ago I was uninsured. Had been for several years, A few weeks ago I started a new job with 100% insurance coverage from the first day. I have a new health insurance card, as of last Thursday. Friday, I got a letter from that insurer informing me in all effect that I was not covered at all (pre-existing conditions, which I have a number of).
What's the difference between my situation a month ago and my situation today? NOTHING. Except that I have a WORTHLESS insurance card in my pocket.
I STILL have to pay OUT OF POCKET for ALL of my current and expectable medical expenses, which are considerable (expectable, because they would likely be a result of my pre-existing conditions).
If someone FORCED me to pay for the insurance I now have - I'D BE MORE ANGRY THAN I CAN TELL YOU.
Right now, Ms. Mahar, I regret this, but I have to be honest with you. NO, I didn't read your whole post. Because I think MANDATES ARE INDEFENSIBLY STUPID, and I don't want to get any angrier at you than I already am.
Do you see what's happening in the polls since Ms. Clinton proposed mandates? I hope so. It's about this issue.
You and people who like this brain-dead stupid mandate idea have a HUGE BLIND SPOT. And you know as well as I do what it is.
THERE IS NO MONEY TO BE MADE COVERING SICK PEOPLE. IF you force private insurers to insure sick people, they'll do what capitalists do - RAISE THEIR PREMIUMS - A LOT.
Whoever does pay for it, it will COST SOMETHING. The question is simply whether the MORAL and ETHICAL IMPERATIVE outweighs the simple ECONOMIC truth. So for you to continue to argue about the economics is for you to ENTIRELY MISS THE POINT.
It's not about economics, Ms. Mahar. Not for people like me. And it never has been. I'm a SOCIALIST, and economic considerations aren't even SECONDARY for me, let alone PRIMARY, and certainly not SOLITARY.
SINGLE PAYER. NOW. BECAUSE SOME THINGS ARE TOO IMPORTANT TO BE ABOUT MONEY.
December 4, 2007 5:34 PM | Reply | Permalink
December 4, 2007 6:24 PM | Reply | Permalink
You're absolutely right, my bad.
thosethingswesay.blogspot.com
December 4, 2007 6:24 PM | Reply | Permalink
I don't know what's your definition of Joe Six (Sick) Pack, but there is a good chance that he'll get some subsidies, so overall he is going to be better off. BTW, in case of universal health care, do you expect that taxes of Joe Six (Sick) Pack will not be icreased at all to pay for his health care? Do expect Bill Gates to pay for all of us?
December 4, 2007 6:28 PM | Reply | Permalink
Obama is not calling for mandates because he has successfully passed healthcare legislation in IL and he knows that mandates are not politically viable. Obama also knows as you mentioned that if the process gets rolling then private insurance will 'wither away' Obama chooses to make healthcare affordable for those who want it as the first step and then evolve to single payor system. He eventually would like to have single payor system but he knows that the problem is urgent and we need to have a plan that can pass through Congress before the next decade. Obama is therefore advocating a plan that he knows will appeal to employers and consumers. Corporations want to get healthcare off their backs so they are globally competitive and 45M consumers need healthcare. This means that the stage is right for legislation to be passed as it would be a win-wn. However mandates are nothing but an obstacle to this process and an unecessary wedge issue that can derail the entire process. Mandates are not the way to go.
I do not like Edwards position. I get angry thinking about the government keeping my tax return to pay for healthcare. The word mandate alone is upsetting. I like the idea of choice. If I want to opt into the government plan I can or I can choose to remain with the private insurance I presently have.
Krugman's analysis on mandates and Edwards plan is wrong.
December 4, 2007 6:30 PM | Reply | Permalink
Maggie,
Thanks for the kind correction. Now, onto mandates and their political feasibility -- well, this is just like the private/public issue. If the votes aren't there to provide medicare for all, it's also possible that the votes aren't there in support of a mandatory program.
My question to you, Maggie is... what if the public's attitude on this can be summed up as "Do Not Want!"
thosethingswesay.blogspot.com
December 4, 2007 6:34 PM | Reply | Permalink
John One One--
I understand why you are so angry,.
But under the mandated plan that Edwards is proposing, insurers could not refuse to cover you because of a pre-exiting condition. You would have full insurance.
To find out more about how and why, please read the post.
December 4, 2007 6:49 PM | Reply | Permalink
Maggie, I'm just curious, why do you ignore Clnton plan?
December 4, 2007 7:02 PM | Reply | Permalink
I agree with the idea of phasing it in by gradually decreasing the age for medicare eligibility while making Medicare's coverage more realistic for younger patients. That is one way that could really work.
I don't agree with this: How can we expect Americans, who are locked into a "what's in it for me" mode, to ever accept a health insurance program that costs them more than they are now paying? It just isn't going to happen. Unless we can somehow build up the altruistic genes in our population we are stuck on this issue.
Each of us (or a close family member) is far more likely to have a catastrophic -- or at least VERY expensive - medical event, than to be injured by a terrorist. Yet, we* pour out our shampoo, we take off our shoes, we let the government listen to our calls, we sanction torture, and on and on... Why? Because WE* have bought into the fear-mongering of those who profit by our fears.
We* need to realize that a healthy populace is good for all of us. We* need to understand that if we* had the bad luck to fall down the stairs in our own home and broke our back, it may spell financial ruin for us and our family, whereas the same injury occurring in say, Saks 5th Avenue would get us years of help without costing the family anything. Health care by lawsuit, and Public Health by WalMart (see flu shots) is not MY idea of "what's in it for me" medicine.
My point is that we have all given up so much from the very distant threat of terrorism, and what citizen can claim that they benefitted from those measures.
We just need to find a way to personalize the very large threat to all of us from being vulnerable by not having health care. No one is safe from the devastation of serious injury or illness without health care coverage. We are all one banana peel away from a $1,000,000 hospital bill.
I personally am for a single-payer, non-profit system. There are many programs available to evaluate therapies and tests in terms of their efficacies; there are ways to keep costs down if the right people are included in decision-making.
*We --> I refer here to the general populace, who Hoppy talks about above; those who say "what's in it for me?" all the while giving up quality of life and freedom because they are afraid of the next 911.
Jan
December 4, 2007 7:10 PM | Reply | Permalink
I would very much like to see an itemized, detailed breakdown of health care spending in the U.S.
Sadly, we already have a rationing system - it's called money.
December 4, 2007 7:20 PM | Reply | Permalink
Davia--
I am not ignoring Clinton's plan at all. It is just that it is very, very much like Edward's plan (I 've tried to make that clear in earlier posts but didn't make it clear here. ) So pretty much everythign I say about Edward's plan also is true of Clinton's plan.
December 4, 2007 7:20 PM | Reply | Permalink
Having lived for a decade in a couple of countries with single payer systems that thought doesn't scare me.I know they worked for me and my family.
As recently as last spring when some of us visited one of those countries a 5 year old became sick. On a Sunday. It took 30 minutes for a house call . (Remember them ?) So there doesn't seem to be a medical problem.There.
There surely is a political problem.Here. And it is well over my grade of pay.
Two random comments.
One:Back in the Hillary/health days it was encouraging to read an article in the Sunday Times about the earnest effort of a group of insurance executives.Front page. Business Section. Gathered together in Jackson Hole.Dress Casual.Brows furrowed trying to devise a Better System for Us All. Anybody know whether they're still meeting? Of met for 5 seconds once Hillary went down in flames?
Two:there may be a clue to solving some of the economic problems in Medicare Plan D(drugs)infamous "hole in the doughnut".
Up to some level medical expenses could be paid by the Govt with some form of deductible. Then, starting at that level the individual would have to pay 100%. (This would control cost by motivating individuals to avoid unnecessary expense during the "joint" period in order to postpone the arrival of that 100% level.) Then at the other side of the doughnut hole the government pays 95%.
So the tax payers are protected against misuse of the system but at the same time the individual is protected against catastrophic expense.
It pains me to admit it but I think the Bush Administration got that right.
December 4, 2007 7:27 PM | Reply | Permalink
So how does Obama plan to deal with the problem of adverse selection? The Massachusetts experience that Maggie cites is evidence that this is not just a theoretical problem.
Look, my employer-provided insurance comes with a mandate. My employer provides me an annual dollar amount that can be credited toward various cafeteria-style benefits, an amount that is determined based on the cost of some of the elements in the benefit package. If I don't use up all of the credit, then the difference is added to my paycheck. But I cannot opt out of health coverage unless I can certify that I am already covered under a spouse's plan. Nor can I entirely opt out of life insurance coverage. The reason for that is to offset the problem of adverse selection.
And under John Edwards's plan (and Hillary Clinton's as well), you can choose either of those things. What you would not be able to do is opt out of coverage altogether. Why should other people pay higher premiums so that you can skate free?
You're free to think that Krugman's analysis is wrong, but don't expect any of the rest of us to accept it just on your say-so. If you think he is wrong that universal insurance cannot work without a mandate, please explain why.
December 4, 2007 8:03 PM | Reply | Permalink
Let's say that whiterosebuddy is single healthy young guy making 40K without insurance in Boston . How much he would have to pay?
December 4, 2007 8:23 PM | Reply | Permalink
I don't know, but what's your point?
His insurance policy would cost the same as anyone else's policy. How much he would have to pay out of pocket would depend on what the scale for subsidies was.
December 4, 2007 8:23 PM | Reply | Permalink
I believe the polls indicate that Americans want universal coverage by a fairly wide margin.
When the question is specifically about mandates, the margin narrows, but there is still a plurality in favor (slightly reformatted for readability in this venue):
December 4, 2007 8:27 PM | Reply | Permalink
December 4, 2007 8:48 PM | Reply | Permalink
The statement is a hot link, click on it.
Please do not make this personal. No one is paying higher premiums and mandates are nothing but a guarantee for higher premiums just like mandated auto insurance.
Maggie generally has accurate facts, but she claims that the Mass program is not mandated. So I am unfamiliar with what she is saying is a problem of adverse selection. If individuals can decide if they choose to buy into the national program, under the Obama plan, I do not see how that creates an adverse selection issue. Can you elaborate?
December 4, 2007 8:58 PM | Reply | Permalink
I think you answered that in your original post:
That's also the reason he is painting Social Security as in crisis -- even though the projections would suggest there is not any dire crisis -- that's a characterization that appeals to younger voters.
The concluding sentence of the paragraph of yours I quoted above is interesting in this general context:
Obama is usually the one who likes to paint himself as being honest enough to tell hard truths -- that's his response when he is criticized for playing into conservative rhetoric about Social Security. But the fact that he is hasn't ruled out mandates at the same time that he is criticizing Edwards and Clinton for including them makes me think he is not always the painfully honest guy he portrays himself as being.
I would agree with you that we should not allow ourselves to be sidetracked with arguments over enforcement mechanisms. There are any number of ways to enforce mandates, and they don't have to be draconian or heavy-handed to work well enough to accomplish the purpose.
December 4, 2007 9:09 PM | Reply | Permalink
Maggie,
Do you beleive that mandates are politically viable? Do you believe that Americans will accept the punitive measures Edwards proposes for those who refuse to buy insurance when it is mandated? The state mandated healthinsurance in MA leaves many folks uninsured. Mandates are simply not a panacea and they will slow down the process as both employers and citizens will fight against the mandates.
Let's look at how well mandates are working in MA
There are folks who haven't signed up yet afterall. In addition to those who haven't signed up yet, and those who will end up paying fines as a result of their refusal to sign up,
So, mandatory health insurance is great - IF you can get everyone to sign up, and if you can fine those who refuse, and if you don't go over your budget (because if you go over budget, then either something is getting the axe, or you're increasing taxes or fees somewhere down the line), and if you don't see an increase in cost from insurance companies. There are an awful lot of "if's" there.
Mandates are simply going to increase insurers profits and healthcare costs will continue to spiral.
The greater the number of risk pools, the greater the inefficiency of the health care system. Hence, one risk pool -- a single payer system -- is ideal for keeping healthcare costs under control. Each insurance company sells multiple plans, each of which is at least one separate risk pool; our current healthcare system has thousands of risk pools.
An "individual mandate" without complete restructuring of the health insurance market results in the greatest number of risk pools and hence is the most inefficient way to allocate medical resources.
Why? Let's look at health care costs of comparable countries. The US has the greatest number of risk pools and neglects to cover 48 million people. All these other countries have a single(or very few) risk pool(s) and cover their entire populations for half the expense with little difference in health care quality. Obviously, the US system is the least efficient.
Why does a multiple risk pool system add to health care administrative costs?
1) Creates a medical loss ratio. Insurance companies make much of their money on what Wall Street calls their medical loss ratio (i.e., how much money they have to spend on actual medical care versus insurance overhead and profit). Many individual policies have a medical loss ratio of 45%, meaning over half the money that is collected into that risk pool goes to insurer profits and overhead, making Wall Street investors happy. Under Medicare, a single payer system in the US, the medical loss ratio is 96%, meaning more money goes to health care instead of insurance stock dividends, making more people healthier. A typical PPO medical loss ratio is 72%. An "individual mandate"(a requirement that everyone must buy insurance) maximizes the number of risk pools, hence greatly increasing insurer profits. This is the reason why health insurance companies have always supported an "individual mandate" on health insurance and why Governor Schwarzenegger proposed an individual mandate as his optimal method of getting universal coverage.
December 4, 2007 9:51 PM | Reply | Permalink
Sorry, I didn't notice the link. On my laptop screen, there is not sufficient contrast between the link text and the regular text to be readily noticeable.
I disagree with your assertion that Obama's plan is "economically fairer" than the Clinton and Edwards plans. Never once in your analysis do you address the problem of adverse selection. If those who expect to be healthy enough to self-insure are allowed to opt out of the system, then the loss per number of insured will be higher than it otherwise would have been, and premiums will have to be raised to compensate. This will encourage more people to self-insure, resulting in another round of premium increases, and so on until the system either reaches equilibrium or collapses.
But let's say the system does reach equilibrium at some point. And after 5 years, a young healthy guy who originally opted to self-insure is diagnosed with leukemia. He realizes that he can no longer afford to self-insure, so what does he do? Since he cannot be refused coverage or charged a higher premium for a pre-existing condition, he now opts to buy insurance. He gets his coverage at the same rate as people who have been paying into the system for the last 5 years, but he has contributed nothing to build up the kitty that he is now going to be drawing from. How is that fair?
No, if you are going to charge the same price for everyone and nobody can be turned down, the only way to make it fair is to require everyone to participate, whether they think they need insurance today or not. Unless they are independently wealthy, they are eventually going to need it.
December 4, 2007 10:03 PM | Reply | Permalink
I wasn't making it personal; I didn't mean you personally, I meant you in the abstract.
That's the way adverse selection works -- if you fix the price for insurance and allow the low risk people to opt out, then the only people who will buy insurance will be those who expect to have a high rate of claims relative to those who choose to opt out. That drives up the premiums and causes even more people to opt out.
The blog post you linked to said that well-off people would not be likely to opt out, only those who were relatively low on the income scale, because it would be more difficult for them to afford the premiums. It seems to me that healthy people who are well off could be more inclined to opt out than the general population, because they are more likely to conclude that they can self-insure. Those with lower incomes, on the other hand, would qualify for subsidies.
And, indeed, Maggie's post said that some 20% of the people opting out of the program in Massachusetts made in excess of $50K a year.
December 4, 2007 10:22 PM | Reply | Permalink
Obama is not choosing mandates for two reasons:
(1) the politics, as you say (younger voters, let's make sure it can get through)
(2) He's not sure they're necessary, and rather
than forge ahead with a tougher sell, he's taking a more experiential approach.
Everyone agrees, as you say, that we need a large risk pool. The main benefit of mandates is that they force as many as possible in the pool. The only benefit of mandates over other programs, then, is to bring in people who will not come UNLESS FORCED.
This is encapsulated by the economic theory of "adverse selection." My problem is that everyone takes adverse selection as an absolute fact, when it is just a theory whose empirical support has been questioned, and no one nows how it would play out under a plan like Obama's where the price would be lower and where there would be strong efforts outside of "mandates" to ensure that people know about coverage and sign up. That is, can AFFORDABILITY + ACCESSIBILITY achieve the same or similar amount of insureds as Mandates? I think Obama thinks it will be close, without the negative baggage.
So -- who is RIGHT? I don't think we know. Mahar's quotes of Cutler basically admit that the mandate issue is really about how many free riders there will be, and that Mahar doesn't know the answer either: "In other words it seems that Obama, like Edwards and Clinton, realizes that in the end mandates may well be needed."
Yes -- they MAY WELL be needed, but it's not clear at this point, and why risk everything by insisting on this theoretical necessity?
If you have the data, please show me to the door. But citing 200,000 in Mass, without any relative numbers, and without an account of the price and accessibility issues, doesn't seem adequate.
As Mahar' quote of CUtler shows, even Obama would go for the mandate if needed down the road. So, as said, it's a matter of getting something that will pass through, that will not create a conservative backlash, and that is experimental and adaptable to conditions as they emerge...
December 4, 2007 10:40 PM | Reply | Permalink
Maggie says,
Other sources I've read say that Massachusettes does have a mandate. Consider this in today's NYT article, for example:
And this in the Wall Street Journal:
What do you say, Maggie?
December 4, 2007 10:59 PM | Reply | Permalink
Mandates are a terrible idea. They are a page right out of the Republican political handbook. So Democrats want to make an issue out of the large numbers of uninsured? The Republican solution: require all those who cannot afford to pay for medical insurance to buy it anyway, further enriching the insurance companies at the expense of the poor.
Democrats have been embracing the mandate approach because they have been convinced by 'political experts' (like those hanging out at the DLC) that the insurance companies are too powerful to take on directly, so we must try to make them 'partners' in our efforts to reform America's health care problems. What these political geniuses have conveniently forgotten is that you don't have to propose a pure Socialize Medicine solution in order to arouse the lobbying instincts of the insurance companies. ANY kind of reform that threatens the profits of privately-owned insurance companies will be attacked as Socialized Medicine. Even the crap being proposed by Clinton and Edwards will be villified as Socialized Medicine by the AMA, the insurance companies, and Big Pharma.
Neither Clinton nor Edwards nor Obama are going to be able to mollify these powerful interest groups by proposing a 'compromise plan' that guarantees the viability of the private insurance industry within their reform proposals. The ONLY time insurance companies will be in a mood to compromise is if they fear that there is a real chance that Socialized Medicine is right around the corner. Until that happens, they will fight with tooth and nail ANY of the reform proposals that the Democrats propose. Their Prime Directive: respond hysterically and with every means available to any reform proposal however mild, 'cause if you don't nip it in the bud now, it's only going to cost you more later.
Sometimes you have to wonder about the political intelligence of the typical Democrat politician/strategist. They like to lead with their compromise proposals (as Hillary and Bill did back in 1993) and then they are stunned when the Republicans and their allies launch a tremendous campaign to demonize their compromise efforts. These people need to learn that the way you play the game is to cry out loudly for the IDEAL solution to the problem, however radical it might be. Put the insurance companies on the defensive. Don't even think about compromise until you have a point of impasse. Who knows? You might even up up getting the thing you really want.
What all three candidates should be calling for is a pure Socialized Medicine model, like England's National Health Service, highlighting the fact that the English approach produces health outcomes equal to those found in America (OECD) at less than half the cost. Call for it because it's the right thing to do, because it's the right way for a civilized society to approach the issue of health care. Don't allow the Republicans and their allies to get away with the false claim that universal health care---free at the POS---would be more expensive than America's morally corrupt private health care system. The facts tell us quite the opposite. In 2002, UK citizens spent only about 8% of their GDP on health care ($2,160 per citizen). This compares to the approximately 15% of GDP that Americans spent on health care that year ($5,267 per citizen).
Why oh why oh why can't we get some Democratic frontrunners who will call for policy changes based on moral imperative rather than on their oh-so-clever political calculations?
December 5, 2007 6:25 AM | Reply | Permalink
I did not address this because I beleie it is theory and it is not something that is happening in MA where there is a individual mandate.
Individual mandates do increase premiums and create greater profits for the insurers.
December 5, 2007 6:43 AM | Reply | Permalink
Why do we have insurance anyway? It just drains cash that should instead be used for patient care.
I'm on Medicare. If I get sick, I get care and the caregiver gets paid. If Medicare doesn't pay for something I can pay for it directly. If I don't get sick I don't go to the doctor and expenses are not incurred.
Can it be any simpler?
The best plan is John Conyers' HR676 Medicare-for-all bill. Is it perfect? No. Can it be tweaked over time? Yes. The cost to the public? Less than the 16% of GDP we are paying today. Coverage? 100% rather than 85%. Health care bankruptcies? Gone. The payment method? Through taxes rather than the myriad ways of filtering down from employers to consumers.
Jack Lohman
http://MoneyedPoliticians.net
December 5, 2007 6:44 AM | Reply | Permalink
I think the best possible thing would be for every American to be covered by health insurance. That means a few things:
1. That every American is covered, but also that the insurance they're getting is affordable.
2. That every American is covered, but that they have a choice about who provides that coverage.
3. That every American is covered, but that insurance companies cannot hike up rates.
4. That every American is covered, but is not forced into coverage that they either do not want, or cannot afford.
5. That every American is covered, but also that every American has equal access to quality health care.
Barack Obama's plan covers all of my concerns and puts us on the path towards having every American covered by health insurance. Hillary Clinton and John Edwards's plans do not meet all the above criteria and that's a problem.
December 5, 2007 6:46 AM | Reply | Permalink
As usual, a careful analysis, much appreciated. Also at least a point size larger than the version on your own blog.
Funny thing for me was reading the quotes in included from Krugman and Reed. The first already basically gives the analysis in a sentence or two, and the latter sounds even more of a loony straw man than ever. (Could police arrest pundits who sound this silly? Could they lose their jobs? I guess not.) In essence, what Maggie's able to do so well is to explain what's compressed in the former and ignore the impulse I'd have had to rant about the second.
I still worry about the public-private mix as ultimately sabotaging the government effort. Somehow, I keep thinking, they'll find a way to mean that the more costly cases will fall to the public sector. Either they'll get to tamper with the wording of the community rating clause to make it less than fully effective as part of the compromise to get a plan enacted at all, or they'll get around it by not requiring physicians to accept the public insurer, or they'll get around it more subtly and perhaps more powerfully by marketing able to target the buyers they want. That's always the perils of starting with a compromise because we think it's what will be accepted.
BTW, one day if you ever feel up to a personal post, I'd love to hear your migration from literature professor to financial journalist.
John
http://www.haberarts.com/
December 5, 2007 7:44 AM | Reply | Permalink
James Kroeger--
You write: that mandates would "require all those who cannot afford to pay for medical insurance to buy it anyway, further enriching the insurance companies at the expense of the poor."
This is completely untrue. If you took the time to read any of the Democratic proposals--and took time to read this post--you would realize that "the poor" would receive full subsidies to buy insurance. Nothing is at "their expense." You would also realize that the lower-middle-class would receive partial subsidies. Finally you would realize that nobody would be forced to "enrich the insurance companies" because everyone would have the choice of buying Medicare (or some form of goveornment health insurance) rather than buying from a private sector insurers.
Apparently you also don't bother to read political blogs becaues you go on to write: "Democrats have been embracing the mandate approach because they have been convinced by 'political experts' (like those hanging out at the DLC) that the insurance companies are too powerful to take on directly . . ."
Even people don't like mandates realize that this has nothing to do with being afraid of taking on the insurance companies. In fact, the Democratic plans all call for tightly regulating the insurance companies in ways that the insurance companies do not like at all--forcing them to compete with a Medicare-type-plan on a level playing field.
The motive behind mandate is simply that Democrats are trying to figure out how to get enough money into the insurance pool to cover everyone. Even if Democrats were proposing a single-payer Medicare-for-all program they would need to require that everyone chip in (just as we do for Medicare), paying more if they earn more.
Clearly, you didn't bother to read the post. (Or you read very little of it). You simply decided to use this thread to expound on your own ideas--which bear relatively little relation to the facts.
As a result, you are spreading mis-information on this thread--which I deeply resent. I don't at all mind when people express opinions that I disagree with, but I do mind when they use my post as an opportunity to broadcast supposed "facts" that simply are not true. This is a complicated issue: the last thing we need is to have blowhards muddying the waters. If you are too lazy to read the whole post--and too lazy to get the facts straight--then please do not comment.
Most people on this thread are wresltling with the ideas--trying to understand what everyone else is saying. You are just going off on your own toot.
December 5, 2007 8:43 AM | Reply | Permalink
Thanks to everyone for your comments.
First let me try to straighten out the confusion about Massachusetts . .My fault, I should have explained more about what happened there . . .
Originally, Massachusetts did plan to have a mandate requiring everyone to buy insurance. But the mandate had no teeth; if you didn't enroll, you simply paid a fairly small fine. A lot of people did the math and decided they would rather pay the fine.
(By contrast, Edwards and Hillary don't have a fine. Edwards will simply automatically enroll you in the Medicare-like plan if you don't sign up (without charging you any more than people who enroll volutarily, and if memory serves that is what Hillary is doing too. That's what "mandate" means--everyone is required to sign up, not that you can either sign up or pay a fine.)
To make insurance affordable assachusetts does offer subsidies for people who can't afford insurance. The subsidies are on sliding scale, but just to give you an idea: if you are a family of four earning less than $60,000, you get a partial subsidy. So the subisdies help median-income people. with the state providing a 100% subsidy for those who earn less than 150% of the poverty level.
Those receiving the full subsidy are enthusiastic. The state had hoped to sign up 57,000 uninsured people who qualify and they’ve over-shot their target: 76,200 of Massachusetts’ poorest citizens have enrolled.
At the other end of the spectrum, the program isn’t doing as well. Uninsured citizens earning more than 300% of the poverty level are expected to buy their own insurance. Here, the state hoped that 228,000 of its uninsured citizens would sign up. So far, just 15,000 have enrolled. But their premiums are needed to keep the program going. If more in this group don’t sign up, it is not at all clear how the state will be able to continue subsidizing the poor and the median-income middle class.
Too many fairly (or very) healthy wealthy people are deciding that they probably won't need much medical care and can afford to pay for what they need out of pocket. They are not particularly interested in helping to cover other, older, poorer or less healthy people. And they believe (rightly) that if the unthinkable happens and they are in a terrible auto accident or are suddenly diagnosed with cancer, they can sign up for insurance then. (Massachusetts has partial community rating, so you can get insurance, at the same price as everyone else, however sick you are and whatever pre-existing conditions you might have.
Even if Massachusetts didn't have community rating, and insurers were not required to sign these people up when they suddenly wanted insurance, they know that, in this country, we are not going to leave them rotting by the side of the highway when they are in an accident, and hospitals won't refuse to treat them when they have cancer. So they really aren't taking a risk--they are just "free-riders" counting on the rest of us to pay for them.
White Rose Buddy-- this is what SGL is trying to explain when he writes: " If those who expect to be healthy enough to self-insure [i.e. pay for whatever care you need out of your own pocket] are allowed to opt out of the system, then the l[cost of care per person in ihe insurance pool] will be higher than it otherwise would have been, [ because the people who buy insurance will be those who know they need it because they are sick or old enough to be at risk] and premiums will have to be raised to compensate. This will encourage more people to self-insure, resulting in another round of premium increases, and so on until the system either reaches equilibrium or collapses."
SGL continues " Meanwhile, after 5 years, a young healthy guy who originally opted to self-insure is diagnosed with leukemia. He realizes that he can no longer afford to self-insure, so what does he do? Since he cannot be refused coverage or charged a higher premium for a pre-existing condition, he now opts to buy insurance. He gets his coverage at the same rate as people who have been paying into the system for the last 5 years, but he has contributed nothing to build up the kitty that he is now going to be drawing from. How is that fair?"
whiterosebuddy, Akonitum and everyone else who asked about Massachusetts: Here is the final wrinkle that complicates the situation in Mass. : "Massachusetts has only partial community rating. Insurers cannot charge people more if they are sick; but they can charge them more of they are old. A 57-year-old has to pay twice as much as a 27-year-old for the same policy.
As a result, there are a fair number of people 50-65 who are too rich for a subsidy but too poor to buy the high-priced insurance that is available to older people.
When they were reforming insurance, why didn't policy-makers tell insureres that they couldn't charge older people more? Because they knew that if they did that, insurers would have to charge younger people more. (Keep in mind that insurers in Mass are mainly non-profits like Harvard Pilgrim and even left-liberals agree that these non-profits have bent over backwards to come up with insurance that is as affordable as possible. But there has to be enough money in the pool to cover medical care. So they really would have to charge young people more.)
And the reformers feared that if young people had to pay as much as everyone else, they wouldn't sign up. OF course it turns out that even when they are asked to pay only half as much as older people, wealthier young people (who didn't qualify for subsidies) didn't sign up.
As a result, there is not enough money in the pool for Mass to be able to hike the subisdies for those older people who truly can't afford the insurance.
So Massachusetts has wound up "exempting" fully 20% of the population from the insurance mandate saying that these people don't have to sign up for insurance becuase there is not enough money in the pool to give them the subsidy they need.
And there is not enough money in the pool because Mass did not truly "mandate" insurance for everyone automatically enrolling people in a Medicare-for-all type public sector plan if they did not voluntarily sign up for either a Medicare-for-all type plan or private insurance. NOTE EVERYONE HAS A CHOICE. THOSE WHO LIKE SINGLE PAYER CAN DO IT.
IF you would like to understand more about what is happening in Mass, read these two posts on my blog www.healthbeatblog.org:
Massachusetts Health Reform: The Canary http://www.healthbeatblog.org/2007/10/massachusetts-h.html#more
and
"Universal Coverage: Why Was Massachusetts . . ."
http://www.healthbeatblog.org/2007/10/universal-cover.html
December 5, 2007 9:45 AM | Reply | Permalink
In this debate (on a subject that confuses me as much as the next person) I think there are several points all should agree with here but need making:
* Krugman, whose column accuses Obama of "mudslinging" -- because the latter does not have mandates for adult coverage in his plan, and then has the temerity to argue that the Obama plan is better than its alternatives -- was outrageous and hyperbolic, even by campaign hardball standards. The Gray Lady printed two very gentle letters in response, and those (as in the 'go easy' column here at TPM Cafe) that are a little stronger fail to really note how out of bounds such an approach is on such a heavily debated point. The key is how, in this campaign, it was possible for Hillary Clinton and Paul Krugman to ASSUME that mandates are THE progressive position, when no such consensus exists, or, in my view, should exist.
(I do support a progressive consensus in favor of single payer, which I beli