2008-02-24

Mandates

From Economists for Obama:
Would a Health Care Mandate Mean Universal Coverage?

Jonathan Gruber of MIT has a new NBER working paper on health insurance coverage, based largely on a simulation model. Krugman cites the paper as evidence that making coverage mandatory makes a big difference for the number actually covered.

However, if you read the whole paper (unfortunately only available to subscribers), you find that Gruber sidesteps the crucial question of how a mandate will be enforced and just assumes a mandate will work. He writes:
The second option is ... by adding an individual mandate, a requirement that all individuals obtain insurance coverage, to the universal access option. This is similar to what is required for auto insurance in many states, and was a centerpiece of the recent Massachusetts reform plan. We have no experience to date with such a mandate, so it is hard to predict the success of enforcement. But, if penalties are strong (as they are in Massachusetts, where individuals are liable for half of insurance premiums even if uninsured), the mandate is likely to be close to universal. For simplicity here I assume that the mandate provides close to universal coverage, although in practice some individuals are likely to "slip through the cracks".

With all the attention being paid to mandates as the big policy difference between Obama and Clinton, I can't emphasize enough how important this is. (I've commented on their plans previously: Posted Elsewhere 2.) There is little point in arguing that full coverage cannot be acheived without a mandate, if one cannot argue that full coverage will be achieved with a mandate. Of course a sufficiently draconian mandate will likely assure nearly full coverage, but this is irrelevant if that mandate is to harsh to be politically viable, i.e. shooting free riders on sight, or if the costs of enforcing that mandate exceed the costs of paying for free riders directly. Moreover, there is plenty of evidence that government mandates do no secure full compliance, e.g. health care in MA or auto insurance. All of this is well argued in the Economists for Obama post.

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