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HEALTH REFORM: Should It Include An Individual Mandate?

December 10th, 2007

A recent Health Affairs article by Columbia University’s Sherry Glied and coauthors is figuring prominently in the debate over whether to require individuals to purchase health insurance as part of the proposals to achieve universal coverage. In the race for the Democratic presidential nomination, Sen. Hillary Clinton (NY) and former Sen. John Edwards (NC) have included such an “individual mandate” in their health reform plans, while Sen. Barack Obama (IL) has declined to do so.

In “Consider It Done? The Likely Efficacy of Mandates for Health Insurance,” Glied, Jacob Hartz, and Genessa Giorgi survey compliance with health insurance individual mandates in the Netherlands, Switzerland, and Hawaii, as well as compliance with mandates in other areas ranging from automobile insurance to child support. They find that “high-compliance situations share several features: Compliance is easy and relatively inexpensive; penalties for noncompliance are stiff but not excessive; and enforcement is routine, appropriately timed, and frequent.”

In a Dec. 7 editorial, the Concord Monitor in Concord, New Hampshire, cites Glied’s article in arguing against requiring individuals to purchase health coverage. “Government mandates have been used to force people to buy auto insurance, immunize their children, pay child support and pay workers a minimum wage. But compliance rates, according to the journal Health Affairs, are far from universal; just 77 to 85 percent for immunization and 30 percent for child support.”

But in an article on the same date on The New Republic Web site, Jonathan Cohn cites Glied in arguing for a health insurance individual mandate. Calling Glied’s work “the most definitive paper on the subject” of the effect of mandates, Cohn says the Health Affairs article means that an individual mandate can be effective in expanding health coverage if policymakers get three things right: “Making insurance affordable by restructuring the insurance market and offering subsidies (which . . . all three Democrats would do); creating an infrastructure for tracking exactly who has insurance; and imposing real penalties on those who do not comply.” Cohn adds: “Interestingly, the penalties don’t have to be onerous, according to Glied. They just have to be sufficient to make people think twice about turning down an opportunity to get coverage.”

Cohn also contacted Glied to ask how much difference a mandate would make: “After cautioning that she hadn’t made any formal projections, she speculated that a well-designed mandate might catch half to two-thirds of the people left out by a purely voluntary scheme. And with automatic enrollment into a plan, she added, the take-up could be higher. (All the candidates have indicated they support automatic enrollment; but without a mandate preventing people from opting out of coverage altogether, Glied said, it wouldn’t have the same effect.)” Cohn’s own estimate that Obama’s failure to include an individual mandate could leave 15 million people uncovered has been frequently cited in campaign debates.

Stay tuned for more battles in the mandate wars. To read the Glied article and decide on the meaning of its findings for yourself, click here.

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2 Responses to “HEALTH REFORM: Should It Include An Individual Mandate?”

  1. L Ozeran Says:

    EMTALA is a mandate to provide care without a mechanism for ensuring payment for care and it is one of the key factors bankrupting our healthcare system. Our solutions are limited:
    * Repeal EMTALA – highly unlikely
    * Require an individual mandate for insurance (more below)
    * Divert funds from other sources to pay for the uninsured

    Diverting funds seems unlikely. We have a government that pays cost-plus for “rebuilding Iraq” but pays cost-minus for Medicaid. The likelihood of seeing adequate payment from government coffers approaches zero since the opposite (increasingly inadequate payment) has occurred historically. Alternate “out-of-the-box” ideas might include: requiring patients to pay their bills, requiring 10% of all charitable contributions be sent to a national pool of funds distributed proportionately to uncompensated providers, requiring patients who can’t pay to work for their providers until their debt is repaid, or reconsidering debtors prisons. All of these are politically unlikely, which leaves us with requiring individual coverage.

    As many have noted, individual mandates are unlikely to be perfect. There is no such thing as perfect. Because everything has a cost, including enforcement, we should stop pretending that we can ever get something for nothing. It is more important to identify how we can improve our dysfunctional healthcare system toward something which we can actually afford. To this end, individual mandates become one of the pieces of the solution. Rather than reiterate the pros and refute the cons, I will simply say that we should emulate what has worked best elsewhere and accept that if even 60% of individuals participated it would be a huge benefit for our system as a whole. With proper incentives to participate and disincentives for violators, I believe that we can reach 90% or better.

    As to what constitutes a basic plan, I agree with others, including California’s Governor, that preventive services carved out from a high deductible plan provides the needed coverage at an affordable price. Those who meet low income criteria should get government subsidies on a sliding scale and no one should be exempted. The increases that those not receiving subsidies pay would be less than what we currently pay now. How? Healthy people who “wing it” under the current system would pay premiums rather than paying nothing when they are seriously ill unexpectedly and can’t afford to pay. In addition, there would be long term cost reduction from preventive services for those who currently wait until a crisis exists causing them to obtain more services that are less effective at higher cost. Preventive services enable earlier detection and more effective treatment at an earlier stage of disease at lower cost.

    We desperately need popular support for an individual mandate. When businesses realize that their healthcare costs will drop significantly with an individual mandate, perhaps we will see a strong PR campaign set in motion.

  2. Greg Scandlen Says:

    Sure, a mandate is probably possible — IF the coverage is affordable (and seen as valuable by the consumer), and IF the subsidies are perfectly attuned to the needs (which vary from month to month) of the consumer, and IF the penalty is perfectly set (not too high and not too low) for each individual consumer, and IF we can track who is in compliance and who is not.

    Of course the odds of aligning all these factors are microscopic.

    But before we even get to that point, we have to decide WHAT is being mandated (“basic” coverage, “comprehensive” coverage, “catastrophic” coverage? and what exactly do we mean by each of those?), and WHO is being mandated (the poor? the wealthy? the disabled? the homeless? immigrants legal or not?). Then we have to ensure that what is being mandated is actually available in all areas at all times. And we have to make sure that the mandated coverage pays providers well enough that they will accept it (unlike Medicaid), but not so well that we encourage over-utilization. And we have to ensure that the insurance providers don’t undercharge or overcharge for the coverage.

    Are we having fun yet?

    And then we should really spend a minute or two thinking about the effects on families of requiring they pay insurance premiums BEFORE they can buy food, or housing, or clothing for the kids, or transportation so they can get to work.

    And we have to do all this in a highly political atmosphere where each side is trying to discredit the other, not just in academic journals and op-ed pieces.

    No problemo.

    Greg Scandlen

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