Our guest blogger is Emily Oshima, Research Associate/Policy Analyst with the Health Policy team at American Progress.
Despite recent political retractions and legal affronts, the individual mandate was first proposed by conservative economist Stuart Butler in the 1989 Heritage Foundation paper Assuring Affordable Health Care for All Americans. In it, Butler detailed what he called a “National Health System for America,” with the first of four objectives listed as “All Americans should be guaranteed access to affordable health care.” We agree.
In a recently released paper, Neera Tanden, President of the Center for American Progress, and Topher Spiro, Managing Director of Health Policy at the Center, systematically review the evidence for the individual mandate to purchase health care insurance as an “essential pillar” of health care reform. Tanden and Spiro examine both successful and unsuccessful models from U.S. states and abroad to illustrate how critical a mandate is in achieving near universal insurance coverage while maximizing bang for the healthcare buck.
For instance, Switzerland implemented a mandate in 1996 and less than one percent of the population is currently uninsured as a result. The Swiss also spend approximately $2,000 less per person on healthcare than Americans and enjoy the second longest life expectancies in the world. The provision has also succeeded in Massachusetts, where the mandate not only led to a 98 percent coverage rate, but also strengthened employer-based coverage, while decreasing hospital admissions and length of hospital stays.
A less successful example is New Jersey, which prohibited insurers from denying coverage to any individual, regardless of health status, and allowed residents to purchase insurance directly from an insurer, instead of through an employer, in 1993. These reforms were implemented without an individual mandate and attempted to ensure that those with medical needs were not denied critical coverage. But the result was a catastrophe –- older, more costly individuals enrolled in coverage, causing premiums to rise by more than 150 percent in four years. Consequently, enrollment declined sharply – by nearly 50 percent in the same period – leading to lower coverage rates and higher costs for those who needed coverage most due to adverse selection.
Although the mandate is easily the most controversial aspect of health care reform, numerous independent analyses show that it not only will achieve near-universal coverage, but will also:
– Significantly reduce the cost of uncompensated care
– Lower premiums in both the direct-purchase market and market for employer-based coverage
– Increase the number of small businesses that offer coverage
– Increase enrollment in employer-based coverage
– Increase the cost-effectiveness of reform
For more on the importance of the mandate, check out the paper.