On December 7th Paul Krugman wrote another column about health insurance mandates.
Krugman responds to two arguments against mandates but then offers a quote that reinforces a third and much stronger argument against mandates:
By the way, the limitations of the Massachusetts plan to cover all the state’s uninsured — which is actually doing much better than most reports suggest — come not from the difficulty of enforcing mandates, but from the fact that the state hasn’t yet allocated enough money for subsidies.
I believe enforcement will be more difficult than Krugman admits however that argument is secondary to a bigger problem.
What if Congress fails to sufficiently subsidize those mandates? To impose a federal mandate with inadequate federal subsidies will create a federal law that will enrich insurance companies by forcing us to buy sub-standard policies at inflated prices.
I assert that mandates should not become a "litmus test" until after we have assurances that federal subsidies are sufficient and that the fine print is acceptable.
If we cannot achieve genuine single payer (my preferred choice) I would strongly support a public option buy in that would give every American the ability to buy in to the Medicare system, for example. However that idea only works if the amounts charged for the public option buy in are (a) affordable and (b) lower than comparable private coverage.
Note that (a) and (b) are distinct and independent requirements.
If insufficient money is allocated from general tax revenues to properly subsidize the buy in option then to impose mandates creates a windfall for private insurance companies. A financial feast for insurance companies at our expense.
Using the auto insurance industry as an example, in response to mandatory auto insurance laws, sub-standard insurance companies do offer crappy high priced policies to allow people to comply with mandatory insurance laws. You can find those policies advertised at 2:00 am on most local TV stations and being a general practice lawyer I have experience dealing with those companies.
It's not pretty.
If the federal subsidies are insufficient, a federal mandate will merely force people into buying those crappy policies.
Therefore, in my opinion, federal mandates must be secondary to and contingent upon adequate assurances that sufficient federal revenue will be made available to offer adequate subsidies. Until that is assured it is counter productive and needlessly divisive to argue that mandates constitute some sort of litmus test that determines who is and is not progressive.
Krugman observes that Hillary and Edwards offer more for subsidies than Obama. Here is the quote:
The second false claim is that people won’t be able to afford the insurance they’re required to have — a claim usually supported with data about how expensive insurance is. But all the Democratic plans include subsidies to lower-income families to help them pay for insurance, plus a promise to increase the subsidies if they prove insufficient.
In fact, the Edwards and Clinton plans contain more money for such subsidies than the Obama plan. If low-income families find insurance unaffordable under these plans, they’ll find it even less affordable under the Obama plan.
But notice that Krugman does not argue that the subsidies proposed will be sufficient and for me that is the critical question that must be answered. Before we make mandates a litmus test concerning who is and is not progressive on health care, we need to acknowledge that mandates are a bad idea unless sufficient federal revenue is allocated.
Therefore mandates must remain merely as an option until after we see the fine print.
Risk pool issues & cherry picking:
Krugman is somewhat correct, here:
Look, the point of a mandate isn’t to dictate how people should live their lives — it’s to prevent some people from gaming the system. Under the Obama plan, healthy people could choose not to buy insurance, then sign up for it if they developed health problems later. This would lead to higher premiums for everyone else. It would reward the irresponsible, while punishing those who did the right thing and bought insurance while they were healthy.
But what if those same healthy people are offered a private policy with say a $10,000 deductible and a $100,000 lifetime limit on benefits? That will be very much cheaper than any conceivable public buy in option and will allow the exact gaming the system Krugman opposes.
We can counter that with regulation but the wisdom of mandates remains contingent upon the fine print of the final legislation.
I do see situations where mandates are a good idea but I also see situations where mandates are a bad idea.
Therefore it is needlessly divisive to argue that mandates should be some sort of litmus test for a progressive plan.
In the long run, the only way to stop "gaming the system" is to end the game by having the federal government offer affordable quality coverage. Should everyone be covered? Yes, but general tax revenues should be used to cover everyone and private policies limited to situations where people want more or better coverage than the public option.
I assert that to impose mandates before we see proof that Congress shall indeed end the game creates a situation where K Street can game the legislation and thereby create a financial feast for insurance companies and their K Street courtiers.
Political reality
To make mandates a litmus test now, ties the hands of our nominee during the general election.
If either Edwards or Hillary side with Krugman today but in September find it necessary to show flexibility concerning mandates then our making mandates a litmus test today needlessly ties their hands in the future.
In certain circumstances mandates do make sense to me. In other circumstances they do not. Therefore I very strongly reject the argument that anyone opposed to mandates is somehow not serious about health care reform.
Mandates are a topic on which reasonable progressives can and should be free to disagree.