Speaking on MSNBC this morning, former Vermont Governor Howard Dean (D) made the wildly incorrect claim that the provision in the Affordable Care Act requiring almost all Americans to carry insurance is not “essential to the plan”:
DEAN: [T]he truth is the mandate’s not essential to the plan anyway. It never was essential to the plan. They did it in Massachusetts and had a mandate, but we have universal health care for kids in my state without a mandate. … I made this prediction before and I’m going to make it again: by the time this thing goes into effect in 2014, I think the mandate will be gone either through the courts or because it’s unpopular. You don’t need it. There will be two or three percent of the people who cheat. That is not enough to bring the system to a halt and people don’t like to be told what to do.
Sadly, Dean — who has been a leading progressive champion for health reform — is simply wrong about the mandate. As MIT economist Jonathan Gruber explains, this provision is essential to any health reform package that forbids discrimination against persons with preexisting conditions:
Insurance companies are also prohibited from excluding coverage due to preexisting illnesses. This is a highly popular reform, but it doesn’t work in a vacuum. If insurance companies must charge the same price to people whether they’re sick or healthy many healthy people will view this as a “bad deal” and not buy insurance. This results in higher prices that chase even more people out of the market. The result is a “death spiral” that leads only the sick to purchase insurance at very high prices. Several states tried such community rating reforms — offering health insurance policies within a given territory at the same price to all persons without medical underwriting — in their nongroup markets over the past two decades, and sharp rises in insurance prices ensued along with rapidly shrinking market size.
An amicus brief that I co-wrote on behalf of seventeen disease and health organizations goes into more detail. It explains that seven states attempted to ban preexisting conditions discrimination without also requiring everyone to carry a minimum level of coverage, and all of them saw their premiums skyrocket. According to a scholarly study of Vermont’s health plan, Vermont’s premiums shot up after it enacted a ban on preexisting conditions discrimination but no mandate in 1993. Between 1994 and 1996, most of the country only experienced single-digit increases in its insurance costs. In Vermont, however, average premiums increased by 16 percent during this same two year period.
In Massachusetts, the one state to enact a minimum coverage provision along with its ban on discrimination, the numbers are very different. There, individual premiums fell a massive 40 percent in the years after Massachusetts’ minimum coverage law went into effect, while the rest of the nation experienced a 14 percent increase.
Dean’s claim that the courts may strike down the Affordable Care Act’s minimum coverage provision is also misguided. No one questions that a ban on discrimination against persons with preexisting conditions is constitutional, and, as even ultraconservative Justice Antonin Scalia admits, when Congress passes a constitutional law “it possesses every power needed to make that regulation effective.”