For the past week or so, Jonathan Cohn, Ezra Klein, and Paul Krugman have teamed up to attack Obama’s lack of an individual health care mandate more or less non-stop. Obviously, these are three of the smartest liberal commentators working today, but I think they get this one wrong. There have been literally dozens of posts written on the matter, and it’s impossible to respond to all of them, so here I’ll stick to Cohn’s article defending individual mandates at TNR Online.
Here’s Cohn’s theoretical defense of individual mandates:
The logic of a mandate begins with understanding exactly why Obama’s essential diagnosis of the problem–that it’s all about affordability–is wrong. It’s certainly true that cost is the single biggest reason 45 million Americans don’t have health insurance today. That is why all three Democrats have proposed adopting the same set of strategies to make insurance more affordable: Requiring insurers to sell to everybody, at the same price, regardless of medical condition; creating a public program into which anybody can enroll; cutting down on wasteful treatments that drive up the price of medicine unnecessarily; and offering financial assistance to those people who might still need help paying for coverage. Make those changes–in other words, make insurance affordable–and most of the uninsured will leap at the chance to get coverage.
But not all of them. If you stop there, as Obama’s does, some large portion of people–about a third of the uninsured, maybe more, if you believe the projections–will remain uninsured because they will still choose not to get it. Some of these people will make a decision to take their chances on a health catastrophe, figuring insurance isn’t worth the price. Another group of people simply won’t take the initiative on their own, because, quite simply, they won’t give it that much thought. Some will be relatively well-off, some not. In all of these cases, however, the only way to make sure these people get insured is to compel them to do so–in other words, to make it a legal requirement. That’s a relatively simple matter if you have a single-payer, government-run system; you just enroll everybody at birth. (That’s one more reason why folks like me continue to talk up this option, even though none of the leading candidates have taken to it.) But if you want to provide universal coverage mainly through private insurance–which seems to be where we’re heading at the moment–then you have to make people buy it.
Why interfere if people are choosing not to buy insurance and risk the consequences? For one thing, they may not actually grasp the consequences, which in the very worst cases can include bankruptcy or–in the case of those who have to forgo necessary medical care–death. If that sounds paternalistic, then consider that we use a very similar rationale for taking payroll taxes out of people’s wages in order to finance Social Security. We know from the days before Social Security that, left completely to their own devices, large numbers of people will make poor financial planning decisions and end up destitute. So, in order to provide everybody with a guaranteed pension, we compel all Americans to pay into the government’s retirement system. An individual mandate would rest on the same argument: In order to provide everybody with guaranteed medical coverage, we would compel everybody to pay for it upfront (although, again, we’d also offer financial assistance to those who need it).
This explains exactly where Cohn, Klein, and Krugman lost me. I – and apparently Obama too – thought the problem with the health care system was that people weren’t getting the care they needed because they couldn’t afford it. That’s what concerns me about the current health care system, not that young and healthy people don’t buy insurance. I’ll grant that not buying health insurance when you can afford it is a poor decision, but it’s not one that requires nanny state intervention, as Cohn proposes. If forcing people to buy insurance they don’t feel they need sounds paternalistic, that’s because it is.
Cohn’s analogy to Social Security is fallacious. If Social Security consisted of the federal government creating 401(k)s for every American and forcing them to pay in every year, then the analogy would work. But Social Security as it currently exists – as a tax-supported stipend system for seniors – is nothing like that. Indeed, it would be better if it shed the pretense of being a social insurance program and instead functioned as straight-up, means-tested welfare. I recognize that that can’t happen because it would destroy SS’ political base, but it would result in a far more justifiable program.
Cohn goes on to argue for the practically of individual mandates:
Still, the most important rationale for a mandate may be a more practical one: It’s necessary to keep other reforms from unraveling. If you make insurers sell to everybody, even people with pre-existing conditions, but let people choose whether or not to buy it, people in good health will be more likely to wait until they’re sick before buying coverage, figuring there’s no point in forking over premiums while their chances of needing care are so low. This will cause a chain reaction. As healthy people opt out, insurance programs will be left dealing with a population of sicker and sicker people. Since insurance relies on contributions from healthy people to offset costs from sick, it will become more expensive–which will cause even more healthy people to opt out. The cycle will repeat over and over again, with the cost of insurance going up and enrollment going down. Wonks call this the “adverse selection death spiral.” And it’s hardly theoretical. By the late 20th Century, most of the nation’s Blue Cross plans had stopped offering insurance to all comers, regardless of pre-existing condition, because their competitors–who didn’t make the same generous offer–had stolen away all the healthy patients.
But this is not a legitimate critique of Obama’s plan, which contains an employer mandate. Unless a majority of young, healthy people are unemployed, it’s doubtful that they would eschew insurance en mass when their employers are giving it to them anyway.
And here Cohn just gets annoying:
According to Jonathan Gruber, a Massachusetts Institute of Technology economist, it’s impossible to peg the likely impact of a mandate with even the very rough degree of precision he and other economists use for other estimates, simply because it requires making even more assumptions. But he also stressed that the question isn’t whether a mandate will make a difference–it’s how much of a difference and how close to full, 100 percent coverage an individual mandate system would get. Nor is Gruber alone in this assessment: It’s pretty much conventional wisdom among policy makers. Just yesterday, the Wharton School’s Mark Pauly–another highly regarded health economist, but one who tends to embrace more conservative views–co-signed a letter with Gruber and the New America Foundation’s Len Nichols affirming that an individual mandate is essential for achieving universal coverage.
But how many people lacking insurance in a mandate-less plan would be uninsured against their will? That’s the real question. If everyone who wants coverage has it, I don’t know what Cohn thinks the problem is.
That’s what really bugs me about the mandate pushers. They repeatedly complain that Obama’s plan isn’t really universal, which, while technically true, is totally misleading. I want universal, or near-universal, coverage because there are millions of Americans who want coverage and can’t get it. Whether people actually want insurance doesn’t seem to concern Cohn, or Klein, or Krugman; universality in and of itself does. Until they convincingly explain why forcing 20-something unemployed kids to get health care they don’t want should be a major national policy priority, I’ll remain skeptical.