The Mandate Muddle? No, the Krugman Muddle

Krugman supports the version of health restructuring proposed by Schwarzenegger, Mitt Romney, and all the Democratic candidates: everyone is forced to buy private health insurance, with virtually no assurances of affordability,  quality of coverage, business sharing the burden, limits on insurers’ profits, or cost containment. Compare his praise of “individual mandate” restructuring with an on-the-ground assessment of the Massachusetts plan.

NY Times, December 7, 2007

The Mandate Muddle


Imagine this: It’s the summer of 2009, and President Barack Obama is about to unveil his plan for universal health care. But his health policy experts have done the math, and they’ve concluded that the plan really needs to include a requirement that everyone have health insurance — a so-called mandate.

Without a mandate, they find, the plan will fall far short of universal coverage. Worse yet, without a mandate health insurance will be much more expensive than it should be for those who do choose to buy it.

But Mr. Obama knows that if he tries to include a mandate in the plan, he’ll face a barrage of misleading attacks from conservatives who oppose universal health care in any form. And he’ll have trouble responding — because he made the very same misleading attacks on Hillary Clinton and John Edwards during the race for the Democratic nomination.

O.K., before I go any further, let’s be clear: there is a huge divide between Republicans and Democrats on health care, and the Obama plan — although weaker than the Edwards or Clinton plans — is very much on the Democratic side of that divide.

But lately Mr. Obama has been stressing his differences with his rivals by attacking their plans from the right — which means that he has been giving credence to false talking points that will be used against any Democratic health care plan a couple of years from now.

First is the claim that a mandate is unenforceable. Mr. Obama’s advisers have seized on the widely cited statistic that 15 percent of drivers are uninsured, even though insurance is legally required.

But this statistic is known to be seriously overstated — and some states have managed to get the number of uninsured drivers down to as little as 2 percent. Besides, while the enforcement of car insurance mandates isn’t perfect, it does greatly increase the number of insured drivers.

Anyway, why talk about car insurance rather than looking at direct evidence on how health care mandates perform? Other countries — notably Switzerland and the Netherlands — already have such mandates. And guess what? They work.

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.

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.

Finally, Mr. Obama is storing up trouble for health reformers by suggesting that there is something nasty about plans that “force every American to buy health care.”

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.

Here’s an analogy. Suppose someone proposed making the Medicare payroll tax optional: you could choose not to pay the tax during your working years if you didn’t think you’d actually need Medicare when you got older — except that you could change your mind and opt back in if you started to develop health problems.

Can we all agree that this would fatally undermine Medicare’s finances? Yet Mr. Obama is proposing basically the same rules for his allegedly universal health care plan.

So how much does all this matter?

Mr. Obama’s health plan is weaker than those of his Democratic rivals, but it’s infinitely superior to, say, what Rudy Giuliani has been proposing. My main concern right now is with Mr. Obama’s rhetoric: by echoing the talking points of those who oppose any form of universal health care, he’s making the task of any future president who tries to deliver universal care considerably more difficult.

I’d add, however, a further concern: the debate over mandates has reinforced the uncomfortable sense among some health reformers that Mr. Obama just isn’t that serious about achieving universal care — that he introduced a plan because he had to, but that every time there’s a hard choice to be made he comes down on the side of doing less.

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The Boston Globe, September 17, 2007

Health Reform Failure

By Steffie Woolhandler and David U. Himmelstein

IN 1966 – just before Medicare and Medicaid were launched – 47 million Americans were uninsured. By 1975, the United States had reached an all time low of 21 million without coverage. Now, according to the Census Bureau’s latest figures, we’re back where we started, with 47 million uninsured in 2006 – up 2.2 million since 2005. But this time, most of the uninsured are neither poor nor elderly.

The middle class is being priced out of healthcare. Virtually all of this year’s increase was among families with incomes above $50,000; in fact, two-thirds of the newly uncovered were in the above-$75,000 group. And full-time workers accounted for 56 percent of the increase, with their children making up much of the rest.

The new Census numbers are particularly disheartening for anyone hoping for a Massachusetts miracle. In the Commonwealth, 651,000 residents are uninsured, 65 percent more than the figure used by state leaders in planning for health reform. Their numbers came from a telephone survey done in English and Spanish. But that misses people who lack a land-line phone – 43.9 percent of phoneless adults are uninsured, according to other studies.

It also skips over the 523,000 non-English speakers in Massachusetts whose native language isn’t Spanish (e.g. Portuguese, Chinese, or Haitian-Creole), another group with a high uninsurance rate. In contrast, the Census Bureau goes door-to-door for its survey and has translators for almost every language. It gets a more complete picture.

In sum, Massachusetts health reform planners have been wishing away a quarter of a million uninsured people. Recent Patrick administration claims that health reform is succeeding are based on cooked books. According to the state’s figures, almost half of the previously uninsured gained coverage under the health reform bill by July 1. But according to the Census Bureau, the new sign-ups amount to less than one-quarter of the uninsured. Moreover, it’s likely that much of that gain has already been wiped out by shrinking job-based coverage – a longstanding and nationwide trend.

Why has progress been so meager? Because most of the promised new coverage is of the “buy it yourself” variety, with scant help offered to the struggling middle class. According to the Census Bureau, only 28 percent of Massachusetts uninsured have incomes low enough to qualify for free coverage. Thirty-four percent more can get partial subsidies – but the premiums and co-payments remain a barrier for many in this near-poor group.

And 244,000 of Massachusetts uninsured get zero assistance – just a stiff fine if they don’t buy coverage. A couple in their late 50s faces a minimum premium of $8,638 annually, for a policy with no drug coverage at all and a $2,000 deductible per person before insurance even kicks in. Such skimpy yet costly coverage is, in many cases, worse than no coverage at all. Illness will still bring crippling medical bills – but the $8,638 annual premium will empty their bank accounts even before the bills start arriving. Little wonder that barely 2 percent of those required to buy such coverage have thus far signed up.

While the middle class sinks, the health reform law has buoyed our state’s wealthiest health institutions. Hospitals like Massachusetts General are reporting record profits and enjoying rate increases tucked into the reform package. Blue Cross and other insurers that lobbied hard for the law stand to gain billions from the reform, which shrinks their contribution to the state’s free care pool and will force hundreds of thousands to purchase their defective products. Meanwhile, new rules for the free care pool will drastically cut funding for the hundreds of thousands who remain uninsured, and for the safety-net hospitals and clinics that care for them. (Disclosure – we’ve practiced for the past 25 years at a public hospital that is currently undergoing massive budget cuts.)

Health reform built on private insurance isn’t working and can’t work; it costs too much and delivers too little. At present, bureaucracy consumes 31 percent of each healthcare dollar. The Connector – the new state agency created to broker coverage under the reform law – is adding another 4.5 percent to the already sky-high overhead charged by private insurers. Administrative costs at Blue Cross are nearly five times higher than Medicare’s and 11 times those in Canada’s single payer system. Single payer reform could save $7.7 billion annually on paperwork and insurance profits in Massachusetts, enough to cover all of the uninsured and to upgrade coverage for the rest of us.

Of course, single payer reform is anathema to the health insurance industry. But breaking their stranglehold on our health system and our politicians is the only way for health reform to get beyond square one.

Dr. Steffie Woolhandler and Dr. David Himmelstein co-founded Physicians for a National Health Program and are primary care doctors at Cambridge Hospital

Also see: “Why not Single-Payer” a Huffington Post response to Krugman, and
“Paul Krugman is completely wrong” a Daily Kos response to Krugman

1 Response to “The Mandate Muddle? No, the Krugman Muddle”

  1. 1 Federal Farmer October 13, 2009 at 11:30 am

    Now the insurance industry is dupping the WH. This says something about the limits of business ethics generally. I’ve just posted on it at

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