The Case For The Individual Mandate

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"The Case For The Individual Mandate"

keithmarkosSince the disintegration of the public option/Medicare buy-in compromise, some progressives have joined ranks with conservative critics to argue against requiring Americans to purchase health insurance coverage. The turn-around is as extraordinary as it is reactionary. In their anger at Joe Lieberman and the failure of the public plan, progressives are inadvertently supporting a policy that would increase costs and jeopardizes crucial insurance regulations.

Consider the numbers. Last week, liberals defended an individual mandate since the merged Senate bill would have pushed 3 million Americans into the public option and 12 million into private insurance. This week, all 15 million Americans (roughly half of the expanded population) will be required to purchase private insurance. The three million difference is enough to torpedo this bill:

- KEITH OLBERMANN: “The mandate in this bill … must be stripped out,” Olbermann said. “It is above all else immoral and a betrayal of the people who elected you.”

- MARKOS MOULITSAS: Strip out the mandate, 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.

- DEMOCRACY FOR AMERICA: So, the bill doesn’t actually “cover” 30 million more Americans – instead it makes them criminals if they don’t buy insurance from the same companies that got us into this mess.

The math is really quite simple. The individual mandate creates incentives for otherwise healthy Americans to purchase insurance and may be the the only way to achieve affordable universal coverage. Without a mandate, only the sick who need health care would be motivated to purchase it. The pool of insured would be weighted with sick individuals, forcing the costs of the premium to escalate. According to a study by MIT economist Jonathan Gruber, “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.” As Paul Krugman concludes, a plan without mandates would cost $4,400 per newly insured person, the plan with mandates only $2,700.

Since every person has at least some risk of experiencing a medical crisis, encouraging Americans to assume a collective responsibility for medical cost is a reasonable proposition. Its also essential for reforming health insurance markets. After all, demanding insurers accept every applicant without regard for pre-existing condition and charge every beneficiary a community rate is impossible if healthy people game the system and wait until they fall ill to purchase coverage. After all why would anyone spend their healthier years paying insurance premiums if the neighbor across the street can obtain the same coverage for the same rate on a need-it-now basis?

Unlike the public option, a strong individual mandate that’s structured to change behavior and encourage individuals to purchase coverage is the glue that maintains reform’s affordability and regulatory provisions. Strip it, and you might as well “kill the bill.”

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