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The importance of the individual mandate

Markos Moulitsas explains his opposition to the Senate bill, and says it all comes down to the individual mandate. "Strip out the mandate," he says, "and the rest of the bill is palatable. It's not reform, but it's progress in the right direction. And you can still go back and tinker with it at a later time."

I'm sympathetic to his thinking. This was, of course, Barack Obama's position during the 2008 campaign, and it led toarguably the most bitter policy dispute in the race. But after winning the presidency, the Obama administration flipped on it, and they were right to do so. Here's why.

Pick your favorite system. Socialized medicine in Britain. Single-payer in Canada. Multi-payer with a government floor in France. Private plans with heavy public regulation in Sweden, Germany and elsewhere. None of these plans are "voluntary." In some, there's an individual mandate forcing you to pay premiums to insurance companies. In some, there's a system of taxation forcing you to pay premiums to the government. In all of them, at least so far as I know, participation is required except in very limited and uncommon circumstances. And there's a reason for that: No universal system can work without it.

Holding the price of insurance equal, insurance is gamble on both sides. From the insurer's perspective, it's a better deal to insure people who won't need to use their insurance. From the customer's perspective, it's precisely the reverse.

Right now, the insurer sets the rules. It collects background information on applicants and then varies the price and availability of insurance to discriminate against those who are likely to use it. Health-care reform is going to render those practices illegal. An insurer will have to offer insurance at the same price to a diabetic and a triathlete.

But if you remove the individual mandate, you're caught in the reverse of our current problem: The triathlete doesn't buy insurance. Fine, you might say. Let the insurer get gamed. They deserve it.

The insurers, however, are not the ones who will be gamed. The sick are. Imagine the triathlete's expected medical cost for a year is $200 and the diabetic's cost is $20,000. And imagine we have three more people who are normal risks, and their expected cost in $6,000. If they all purchase coverage, the cost of insurance is $7,640. Let the triathlete walk away and the cost is $9,500. Now, one of the younger folks at normal cost just can't afford that. He drops out. Now the average cost is $10,600. This prices out the diabetic, so now she's uninsured. Or maybe it prices out the next normal-cost person, so costs jump to $13,000.

This is called an insurance death spiral. If the people who think they're healthy now decide to wait until they need insurance to purchase it, the cost increases, which means the next healthiest group leaves, which jacks up costs again, and so forth.

Kill the individual mandate and you're probably killing the bill, too. The mandate is what keeps average premium costs low, because it keeps healthy people in the insurance pool. It's why costs have dropped in Massachusetts, not jumped. It's why every other country with a universal health-care system -- be it public or private -- uses either a mandate or the tax code. It's why the Obama administration flip-flopped.

But maybe you're willing to ditch universality. Add some subsidies, leave the mandate, and it's a step forward, right? At least until the project is consumed by an insurance death spiral? And Congress will surely do something to stop that, right? Well, maybe.

Kill the individual mandate and you make it easy for Congress to let the country backslide to its current condition. In a world with an individual mandate, insurance has to be affordable. If it's not, there's a huge political backlash. That gives Congress a direct incentive to focus on cost. Remove the individual mandate and ... eh. If insurance isn't affordable, people simply go uninsured. It's exactly what happens now. Same incentives, or lack thereof, to make the system better.

In his post, Markos says the bill lacks "mechanisms to control costs." I'd disagree with that, pointing to the bundling, MedPAC, the excise tax, the possibilities of a competitive insurance market, and more. The bill doesn't do enough, but it does more than anything we have ever done before. But put that aside for a moment. As Atul Gawande argues, there's no Big Bang of cost control. The public option wouldn't have done it, and nor would Medicare buy-in. It's a process. And this bill, in large part through the individual mandate, creates that process.

The key to cost control is a politics that forces Congress to make the hard decisions that lead to cost control. Right now, the ranks of the uninsured grow, the cost of insurance rises, and Congress can pretty much ignore the whole thing. The individual mandate controls average premium costs, but more than that, it is the political mechanism for cost control. Kill it, and you've killed our best hope of making the next reform better than this one.

By Ezra Klein  |  December 16, 2009; 3:23 PM ET
Categories:  Health Reform  
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Comments

Ezra, a good trial run, or outline, for an op-ed to send to a few newspapers, say...in Maine, Nebraska, Louisianna....

Posted by: HalHorvath | December 16, 2009 3:45 PM | Report abuse

Ezra,

great post. You get it! Markos sadly does not.

---------

The insurers, however, are not the ones who will be gamed. The sick are. Imagine the triathlete's expected medical cost for a year is $200 and the diabetic's cost is $20,000. And imagine we have three more people who are normal risks, and their expected cost in $6,000. If they all purchase coverage, the cost of insurance is $7,640. Let the triathlete walk away and the cost is $9,500. Now, one of the younger folks at normal cost just can't afford that. He drops out. Now the average cost is $10,600. This prices out the diabetic, so now she's uninsured. Or maybe it prices out the next normal-cost person, so costs jump to $13,000.


------------

You want an example of this in action. Look at NJ. Costs in NJ are spiraling out of control at 20-30% increases annually. Single rates now are not unheard of at $700-$800. Family rates at over $2100 are more and more common. The reason? Everything required to be covered due to "mandates for coverage" but no mandate to purchase.

We need MA and not NJ. If Markos gets his way we'll have NJ and he still won't have a clue.

Posted by: visionbrkr | December 16, 2009 3:46 PM | Report abuse

Ezra,

Why do you believe that people have to sacrifice for other people? You believe that a life is more important than the money someone else has, right?

If you want to save lifes, just ban smoking - hundreds of thousands of americans saved a year - with almost no spending.

Wondering if you could address this issue.

Thanks.

Posted by: JohnFSawyer | December 16, 2009 3:48 PM | Report abuse

More irrationality and petulance from the left. You can't outlaw insurance exclusions for prior conditions if you don't have mandates. With all its flaws MA is working.

Posted by: cmpnwtr | December 16, 2009 3:48 PM | Report abuse

Totally on point, I don't see how anyone can not understand that the system can't work without mandated participation, in fact, the way I understand the 'mandate' in the current bill, it is not nearly strong enough to do what needs to be done. I certainly have no love for the insurance companies, but I would have to say that requiring guaranteed issue (no preconditions) and allowing insurance purchase at any time would make it impossible for them to do business - you could get a cancer diagnosis, and sign up the next day for insurance that would be obligated to put out hundreds of thousands of dollars for your treatment. And if there are waiting periods or open season windows that limit your ability to sign up at any time, then it brings us back to the problem of cost shifting to cover the uninsured.

Maybe at some point we will grow up enough as a country to accept the idea that if there is a compelling public interest in having everyone insured, then the way to do it is CREATE A SYSTEM THAT INSURES EVERYONE. The normal way to fund costs that are incured as part of the public interest is through the tax system (or some functional equivalent, such as enforceable individual purchase mandate). Doesn't have to be single payer, could be a voucher system in a regulated market, but in the end it is the only thing what will ever work. That said, the Gawande article does offer a bit of hope for those of us who are about ready to put our heads in the oven at this point (but won't because we don't want to deal with the insurance hassle if we are revived!)

Posted by: exgovgirl | December 16, 2009 3:49 PM | Report abuse

Shorter Ezra--we need to force a lot of healthy people to pay a lot more for insurance then they should so that we can pay blood money to the for-profit insurance companies to cover the sick people that are currently dieing because they can't afford to get coverage. I thought it was our policy not to negotiate with terrorists?

Posted by: AuthorEditor | December 16, 2009 3:50 PM | Report abuse

2007 spin from the progressive blogosphere: Barack Obama doesn't support a mandate for universal coverage, therefore he is no progressive. We prefer John Edwards. What's this about a public option?

2009 spin from the progressive blogosphere: Barack Obama doesn't support vetoing a bill that lacks a public option, therefore he is no progressive. Additionally, he supports a mandate for universal coverage, which diminishes his progressiveness even more.

At what point are we going to admit that the emperor wears no clothes, and that "progressivism" to bloggers is more of an identity than a philosophy, and specifically an identity seemingly designed to exclude Barack Obama?

It would be one thing if Kos were saying that he was deeply unsatisfied with the compromises and didn't support them, but that for policy and political reasons the bill should go forward. He's saying the opposite. After this display, I don't think that Moulitsas/Hamsher/MoveOn should be taken seriously by anyone to the left of the center. If losing a tactical battle to Joe Lieberman is enough to make these folks lose all sense of priorities and perspective, they will have earned some well-deserved obscurity. Mike Tomasky is right--some people just like being disappointed at politicians.

Posted by: TheLev | December 16, 2009 4:01 PM | Report abuse

The only way we could stomach the mandate was if there was an affordable Public Option. This government is NOT going to force me to purchase health insurance from a company who's CEO makes millions a year. It's evil, and I will not be a part of it. I will go to prison first! Enough!

Posted by: AutumnRaine | December 16, 2009 4:01 PM | Report abuse

I am glad that Ezra is taking the issue with Markos Moulitsas. We need that debate.

I agree with Ezra that without mandate, there is no possibility of increasing the coverage and indirectly even start controlling insurance premium price.

However, even though Ezra and Peter Orszag say that this bill has cost control measures; the jury is out there. Atul Gawande says there is no silver bullet to control costs; but it is not clear how that applies to:
- straight forward ways of controlling Medicare costs by brute force of budgetary measures as sanctioned by Medicare Commission and
- eventually to get the 'tariff commission' all across USA modeled along Public Utilities Commission.

Second option is far in future. We are talking here the first option for now. Gawande may be right when he says - 'and what magic that Medicare Commission do to reduce the costs?' where again solutions may be diverse array of techniques.

But the question there is quite mundane - will even Congress empower this Medicare Commission so as it adopts those recommendations? Today, conditions when those recommendations are made in the first place are stacked against such possibility (culprit - Sen. Reid) and we are not sure whether Congress would accept those or not. House bill does not have that and in Conference it is sure that it will be diluted more.

So Markos Moulitsas is right to say that there is no cost control here. Unless Congress delivers that, there is no hope here. As of now, the current bills lack these punches. It may be work in progress but it also represents the danger that the bill will be passed as is with porous cost control measures and hence the anxiety.

Also keep in mind that House does not have 'excise tax' so they for sure will further dilute Senate provisions.

It is all fine for Peter Orszag to slam WSJ Editorial and Ezra to continue to say that 'cost control' measures are there. But these are not convincing. We do not get prize for 'trying hard'. These bills are still disappointments with so many 'daggers' out by Senators and House Representatives to kill many cost control measures as compromises to pass the bill in days to come.

Posted by: umesh409 | December 16, 2009 4:02 PM | Report abuse

As long as you require individuals to buy insurance without giving them the same tax exemption enjoyed by those with employer-paid plans, it is an unjust mandate.

Posted by: Athena_news | December 16, 2009 4:03 PM | Report abuse

By his own admission, Markos does not know a lot about policy issues. Unfortunately, this compromises his ability to make cogent political arguments, because he doesn't understand what is worth sacrificing and what is not.

Posted by: RS22 | December 16, 2009 4:03 PM | Report abuse

Ezra- you see the problem with no mandate but you don't see the problem with a trivial mandate?

And I'll just say one thing about single payer- in a single payer system where people think they are getting free care they will be more lenient on what they get. I think that democrats are in big trouble because I don't think that people have grasped that they are going to be FORCED to buy insurance- so when they have insurance problems they are going to blame the person who made them buy the insurance. I am pretty consistently libertarian but I would have a much easier time supporting single payer than I would this bill.

Posted by: spotatl | December 16, 2009 4:14 PM | Report abuse

If you're a conspiracy buff you'd almost think that the Liebermaniziation of the bill, followed by the very loud, public opposition of Howard Dean and Markos Moulitsas, is a Big Ruse designed to change the optics of this huge expansion of the welfare state. You know, makes it seem a lot less "lefty-friendly" and therefore easier for folks like Blanche Lincoln to stay on board...

Posted by: Jasper99 | December 16, 2009 4:25 PM | Report abuse

I really hate it when the "folks on the left" are the other guys - but as someone working in the field of health policy, watching the left advocate wasting a huge opportunity to expand public coverage to millions of uninsured and underinsured americans through the Medicaid program because there's no public option or because we're not doing single payer is beyond frustrating.

seriously folks - if you think this bill isn't good enough, then just wait for the horrible anti-consumer measures that the next GOP congress and president will put in along the lines of what the last group did... HSAs for everyone and privatizing & voucherizing Medicaid will just be the beginning...

Posted by: tsweeney1 | December 16, 2009 4:36 PM | Report abuse

Ezra, a commenter in the linked blog post about Massachusetts claims to have different numbers from the New England Journal of Medicine indicating that costs have gone up, not down. I found the report here - http://content.nejm.org/cgi/content/full/361/21/2012 - and it says:

"From 2006 to 2008, the average price of a family insurance premium increased by more than 12%, and premiums increased by about 10% statewide this autumn."

Commenters on the various healthcare diaries on Daily Kos are claiming that healthcare costs for small businesses in Massachusettts have gone up 40% this year.

I don't think AHIP is the most reliable source for healthcare costs information; they have a vested interests in making costs appear to be going down or be controlled via a mandate. I'd expect the NEJM to be more reliable.

Posted by: tmo77 | December 16, 2009 4:45 PM | Report abuse


Put me with the rest. The mandate is the legs on the stool from an actuarial perspective. Actually, before the debate got all hysterical; I think there was a vaguely libertarian argument to be made for the mandate, i.e., I shouldn't need to pay more (for you at an ER vs. you getting primary care) because you chose not to pay...that was actually the part that helped sell it to conservatives in Massachusetts (and the Heritage foundation if I recall).

Posted by: ThomasEN | December 16, 2009 4:50 PM | Report abuse

"Why do you believe that people have to sacrifice for other people?"

Because everyone eventually gets sick and dies. If you want other people to kick in when your time comes, you have to be willing to kick in for other people. Another way to think about it is if you want an infrastructure of hospitals, doctors, nurses, medicines, researchers, etc. to exist, you have to pay for it, even in the years when you don't use it.

Posted by: roublen | December 16, 2009 4:51 PM | Report abuse

Of course, the insurance death spiral picture is easy to grasp, because it omits people's bias perceptions regarding risks, the impact of income-based subsidies on the question of whether there is a stable intermediate position.

And of course, it inherits the conceptual flaws regarding risk and uncertainty and regarding representative agents from the broader neoclassically-inspired economic tradition in which the argument is founded.

Start with that initial set-up. Add on top the fact that each "cost to insure" class that can be detected by private insurers is actually a range of cost-to-insure, and the fact that in each cost to insure is a range of degrees of government income subsidy, and you have this situation where people at the low end dropping out increases the cost of premiums leading to more people dropping out.

Across a cost-to-insure class where the number of people dropping out drives up cost which causes a LARGER number to drop out, there is no stable equilibrium.

Across a cost-to-insure class where the number of people dropping out drive up cost which causes a SMALLER number to drop out, there obviously may be a stable equilibrium.

Ezra Klein's framing is that because an insurance death spiral is conceptually feasible its empirically likely. But that ignores that a government subsidy for premium payments by any group spread across cost-to-insure classes pushes all cost-to-insure classes toward stability and away from instability, and employer side play or pay mandates pushes all cost cost-to-insure classes toward stability and away from instability.

So by framing an analysis "could happen, under the correct conditions" as if it was "will happen, under the conditions being established", Ezra argues for a politically illegitimate outcome on the basis that it will force the Congress to cope with the problems that the solution has created.

Which points to the massive glaring flaw in Ezra's argument. Forcing Congress to fix something "or else" is not in fact forcing Congress's hand, if at the same time the political legitimacy of those who could conceivably actually DO the fix has rendered them politically powerless to accomplish it.

Rather, it creates a situation in which "it HAS to be fixed or bad things will happen" means, simply, bad things will happen. People will be mandated to buy unaffordable insurance plans in a still-broken system because in those countries that HAVE a workable system, those people are also operating under some form of mandate.

Posted by: BruceMcF | December 16, 2009 4:53 PM | Report abuse

It seems to me that all of Ezra's strongest arguments for why people should support this bill are based on one very shaky assumption: that the laws included in the bill to regulate insurance companies can or will be effectively enforced. I trust government to provide services,i.e. medicare, public option, social security, etc. I do not trust the government to regulate powerful industries.

Several quick examples of types of laws that are widely ignored in the U.S. by powerful industries: labor laws, clean water act, food safety. Violations everywhere, very laxly enforced. Not to mention the financial industry. Still nothing changed there since the crash.

If we should support this bill, it might help to have a post that explains the following:

1) How will enforcement of insurance company regulations (assuming they stay in the final bill...rumor is they're already being stripped) be different from other unenforced regulations? How will an insurance company that refuses to pay for cancer screenings be dealt with differently from a factory that dumps benzene in a stream?

2) What evidence is there from legislation in the past 30 years or so to back up the claim that new regulations of this kind have been successfully applied and enforced?

Posted by: andrewbaron78 | December 16, 2009 4:54 PM | Report abuse

In a world with an individual mandate, insurance has to be affordable. If it's not, there's a huge political backlash.

I have no idea why, after watching Congress over the last 11 months, you think that their response to a huge political backlash over unaffordable, mandated insurance will be to do things that liberals support (raising taxes, regulating insurance companies, increasing subsidies).

Insurance will get less affordable, the public will get angry, and Congress will gut whatever liberal aspects remain in this bill. Go, Team.

Posted by: JRoth_ | December 16, 2009 4:56 PM | Report abuse

Ezra, I sympathize with your analysis, but for me this is about Barack Obama keeping his promises.

I still think that Obama's December 2007 rhetoric is right. The problem isn't that people don't want insurance. It's that they can't afford it. While on one hand, Obama (Sen. Finance) is funding/subsidizing insurance through taxes on, say medical device companies or insurance companies, on the other hand we're raising the overall cost of insurance by growing the pool and including more of the sick (currently "uninsurable") and making the pool more risky. To use an analogy, we're peeing in the pool and telling everyone to swim in it.

I don't think that's just.

I still need to see more value for my mandated coverage.

But I'm persuadable.

Don't take away my public option without giving me something else in return. End anti-trust. Do the Wyden amendment. Do Rockefeller's 90% medical loss amendment. Something.

Posted by: benintn | December 16, 2009 5:05 PM | Report abuse

I think Ezra you haven't quite hit the root of Markos' objections. The bottom line is that most people on Daily Kos don't trust insurance companies to ever provide quality coverage. They believe that no matter what regulations are in the Senate bill, insurers will find a way to deny treatment. They only trust the public option, and without it, they think the bill is a step backwards.

To convince the left, you'd need to convince them the Senate bill has enough teeth to truly control the insurance companies. That's a hard sell.

Then there's the matter of subsidies. If the bill passes, the individual mandate will become very unpopular very quickly if the subsidies are not adequate - and in the current Senate bill, they're not.

Posted by: tyronen | December 16, 2009 5:12 PM | Report abuse

I don't see how people can be forced to pay insurance companies for crappy coverage. Premiums are going to profits and executive salaries, and not to coverage. There is nothing I have seen in the bill that mandates premiums stay at reasonable levels. Subsidies are not enough for people to afford care when premiums continue to rise.

If we are mandated to buy coverage, there needs to be a guarantee that insurance companies can't continue to raise rates faster than inflation.

Posted by: srw3 | December 16, 2009 5:25 PM | Report abuse

Markos' position is just really, really disappointing to me, and this is from someone who was reading Daily Kos in like 2002. It just reflects a fundamental ignorance about the underlying policy here.

The basic thing is, guaranteed issue = an individual mandate. You can't "strip it from the bill," it IS the bill. What's even left without it? Banning rescissions or something? Big deal...

Posted by: NS12345 | December 16, 2009 5:43 PM | Report abuse

boy Ezra- you're a chump-

why empower the very middle men who are the reason for higher costs-

sure- force everyone to get coverage- premiums will come down-

unless it doesn't-

quite the jump of faith

Posted by: rk02 | December 16, 2009 6:19 PM | Report abuse

Kos is reflecting a newly emerged panic fear in some liberal circles that a mandate without a public option is the kiss of political death.

Strangely, though, in the one state that actually has one -- Massachusetts, with its must-buy, must-issue, no-public-option exchange, and fines for non-compliance, the September polling for repeal of what they've got: 11%

And as for cost-control, the state is moving towards ditching fee-for-service and going capitation-payment.

Posted by: davis_x_machina | December 16, 2009 6:20 PM | Report abuse

"Ezra, a commenter in the linked blog post about Massachusetts claims to have different numbers from the New England Journal of Medicine indicating that costs have gone up, not down. I found the report here - http://content.nejm.org/cgi/content/full/361/21/2012 - and it says:

'From 2006 to 2008, the average price of a family insurance premium increased by more than 12%, and premiums increased by about 10% statewide this autumn.'"

Even if that's the case, it's essentially in line with national increases, suggesting that a mandate sans public option will not lead to massive increases in premiums, as some (on the left, unbelievably) are now claiming.

Posted by: RS22 | December 16, 2009 6:36 PM | Report abuse

It seems like Ezra and the mushy middle are in such a hurry to punch a DFH they don't recognize that they are in what used to be called a raccoon trap. To trap a raccoon, you drill a raccoon-fist sized hole in a log and pound nails around the circumference, bending the nails in so a raccoon could get his hand in but not his fist out. Then you put a ball of aluminum foil in the hole and some dog food. The raccoon sees the shiny foil and won't let it go even if someone is coming up on him with a gun to harvest his hide-it's too shiny to let it go!
HCR has become the Obama fans and mushy middle's foil ball. You all would accept a mandate to buy insurance without any guarantee that it won't simply be used to trap people into an upward spiral of increasing rates, because from what I've seen so far of the Senate's musings there is no intent to limit private insurers ability to use their existing monopoly power to enhance revenue in spite of some more risky coverage.
It's like corrupt police enforcing a mafia protection racket. It should be like a Public Utility District, where a market failure prone commodity is managed by a publicly interested nonprofit agency. The current plan hasn't removed the Gold Rush mania from health insurance at all, it has simply enlarged the stakes. Thanks for the sanctimonious and condescending attitude though, I'm sure everyone appreciates it.

Posted by: sparkplug1 | December 16, 2009 6:56 PM | Report abuse

I am still waiting for someone to explain why this is not a massive giveaway to the insurance companies.

Claiming that rates will come down simply because it's now a mandate is utter hogwash. To the contrary, the insurance companies will have millions of newly subsidized & previously uninsured customers...you don't think they're ready with a million and one excuses to raise rates over the next 3 years before any exchanges are set up?

Please. They're reading the credit card rate & fee jacking playbook right now.

Posted by: ssomo | December 16, 2009 7:15 PM | Report abuse

Ezra, Don't waste your energy trying to debate rationally with the like's of Markos and the rest of the Kos crowd. I've tried, and I could have had more success convincing my cat on the necessity of a mandate than anyone on his site. None of them understand policy, or legislating for that matter, for crap. To them its all a game, a battle. Our side wins, their side looses.

Posted by: truth5 | December 16, 2009 7:17 PM | Report abuse

RS22, the mandate was only fully implmented last year. So 2006-2008 aren't good numbers.

Posted by: truth5 | December 16, 2009 7:19 PM | Report abuse

Athena_news is right. So the question is are we sure that insurance buy ins by folks who are not getting any Employer insurance due to this bill are not tax exempt? That is sucks if it is the case.

But we also have to understand, the subsidies are made available to the very same folks by this bill too which are not generally available to folks who get coverage from their employer.

Ezra, can we request clarification here?

Posted by: umesh409 | December 16, 2009 7:40 PM | Report abuse

"The key to cost control is a politics that forces Congress to make the hard decisions that lead to cost control."

No, no, no. The key to cost control is a politics that forces **individuals** to make the hard decisions that lead to cost control.

Ezra, you have long asserted (or at least implied) that ordinary people are not capable of making rational decisions with regard to their own health care. If you are correct, then we might as well pack it in, because there will never be any way to close the gap between what Americans will demand in services and what they're willing to pay for those services.

The only way to close that gap is to make people actually responsible for what they're consuming, and to make decisions about that consumption that have consequences. There's a wonderful little system for that: It's called paying for stuff with your own money.

No, this doesn't mean that there's no health insurance; it merely means that catastrophic insurance with high deductibles works vastly better than this ridiculous payments-transfer system that we all erroneously call health insurance. It doesn't even mean that there shouldn't be subsidies for those who can't afford care. It merely means that, until we're willing to make people behave like grownups, the problem will continue.

------------------

BTW, I completely agree with you on mandates. We as a society have decided that we aren't going to let people die outside the emergency room because they can't pay. Since we've decided that, free riders simply can't be tolerated. But this fine expression of moral principles is useless without a system where everyone is held accountable (literally) for what they consume in services.

Posted by: theradicalmoderate | December 16, 2009 7:41 PM | Report abuse

In some, there's an individual mandate forcing you to pay premiums to insurance companies.

How many of those countries use relatively unregulated, for-profit insurance companies where your premium will go in part to outrageous executive compensation and lots of coders to deny your claims when you actually need care? There wouldn't be anything wrong with an individual mandate if the insurance companies weren't run on such an obviously evil business model.

Posted by: Shalimar | December 16, 2009 7:41 PM | Report abuse

Mr. Klein,

There's one big problem with your argument. You assume that the majority of uninsured Americans who would be forced to buy insurance under the current bill purposely choose not to have insurance because they're healthy and don't need it. Can anyone provide data to back up this assertion?

Isn't it possible that the majority of the 30 million who would be suddenly covered under this bill don't have insurance now because they can't afford it or can't get it? If true, then it's conceivable that they would actually start using their new medical benefits in big way. And when they do, then everyone's premiums will rise, thereby shooting down your argument completely.

As a result, it seems entirely possible that individual mandates will lead to a rise in premiums, and a big backlash. That's why the public option and the Medicare buy-in were so important, because they created competition for the insurance companies to keep premiums lower in order to keep customers.

Posted by: spineman2001 | December 16, 2009 8:02 PM | Report abuse

It is understandable why progressives like Kos don't like the individual mandate. They are all about political power. For many on the left, health care reform was just a canard for the Democrats to solidify their power base. The more voters you force to rely on the government for their well being, the more power you have over them.

With the single payer option gone, the progressive desire to have power is no longer an option. They are still however stuck with the individual mandate (Obama's concessions to Big Insurance). Since a substantial segment of the progressives are the nation's youth (30 and under) who can get by without health insurance because they are healthy, they will be the ones who will be forced to buy insurance.

For progressives, there is no benefit (the government control they desired) to the extra costs. The individual mandate must therefore go.

Posted by: TomR4 | December 16, 2009 8:04 PM | Report abuse

Here's a problem. The mandate is enforced cross-subsidization; it confiscates money from the healthy to pay for the sick.

In your example, you would make a triathlete who has expected health medical costs of $200 purchase a plan for $7,640. That doesn't seem very fair to me - he's down an expected $7,440 on the deal! And presumably pretty unhappy about it. This effective tax is not dependent on whether the triathlete is rich or poor.

Many other countries square this by funding healthcare through general taxation. At least this is fairer in that most tax systems are progressive.

Forcing healthy (likely younger, and potentially poorer) people to subsidize sicker (likely older, and potentially richer) risks, seems iniquitous.

Posted by: tom1066 | December 16, 2009 9:16 PM | Report abuse

What guarantees are there that if the mandate is law, insurers will keep premiums low? What and where are the incentives for them to do that? Penalties if they don't - are these built into the bill? Of course not.

Of course they'll find a way to lower the increase in rates and still make more money.

And even if they stick a finger in Congress' eye and keep jacking rates up, do you honestly think that Congress will respond to protect the consumer? Why would they when the industry keeps lining their pockets with big bucks that ensure their re-election?

Aren't we seeing the effects of that $$$ relationship now?

Pipe dream, Mr. Klein. Unfortunately, your view is a pipe dream.

Posted by: kim4 | December 16, 2009 11:22 PM | Report abuse

I'm at the point with this -

Maybe it's worth invoking an insurance deathspiral, sans mandate. Sure, it means I don't have insurance either.

But, when we have a system so off-kilter that a single Senator like Leiberman can kill both a public option *and* a medicare expansion because the entrenched interests can give him so much money that he can effectively ignore his own constituents . . .

Maybe it's time to wipe all the pieces off the board. These regulations are perfectly sane and sensible, theoretically, even without the mandate, but in practice yes, they will force the wealthy to live without insurance at all, and destroy the insurance industry.

And for all that that means people I love would die from preventable medical problems before the next opportunity appears, I'm at the point where . . . maybe it would be be worth it. People have sacrificed lives against less virulent enemies.

Posted by: Jonnan | December 17, 2009 7:03 AM | Report abuse

spineman,


the truth to your argument lies somewhere in the middle i believe. There are some without healthcare now that can't get it due to pre-ex and cost etc and when they're given it they'll use it like you say but there are many that because of cost and relative lack of use of healthcare don't see it as a necessity. Its those people that the industry craves to balance the scales. The problem that almost no one speaks to (and Ezra to his credit does somewhat) but I doubt you'll ever hear Markos or Ezra or any radical left wing blogger speak of the US' level of obesity in comparison to the rest of the world and how that is the TRUE driver of cost and how the spike over the last 3-5 years in obesity has driven us to where we are now and where we are about to go. When one third of your population is clinically obese the cost can't go anywhere but up. Studies have shown that if Americans had a relatively average level of obesity compared to the rest of the world then we would gain YEARS on life expectancy that would put us exactly where the rest of the world is at. Then when we get everyone covered it would jump even more. So for all the left wing zealots to tell us that we're 37th because of a lack of healthcare, you're only telling part of the picture and showing us that your agenda is far more important than the overall health of the country.

Posted by: visionbrkr | December 17, 2009 8:02 AM | Report abuse

Good job, Ezra. The Kos-faction et al. seems to be detached from reality here. They will never have another chance at reform -- what other democratic president will EVER try health care reform again? And if Medicare goes bust during a republican admin... bye-bye. Kos etc. have no stomach for pragmatic, literally progressive politics.

Posted by: b4kny2sak | December 17, 2009 8:31 AM | Report abuse

As a middle class, employed individual who just had his contribution to employer-provided insurance double, I desperately want to know what cost controls exist in this bill. I will not receive subsidies. What in this bill will keep my premiums from doubling every two years? It seems clear that the bill would help those within a certain range of the poverty level. However, what happens to those of us outside that range? This information seems difficult to find.

Posted by: lEG2 | December 17, 2009 9:42 AM | Report abuse

tom1066 - The triathelete will one day, God willing, be old and sick too, and then his $7k annual premium won't begin to cover his expenses. Or perhaps he gets mangled in a horrible bike collision.

His money isn't confiscated. He's using it to buy into a system that will be there when he needs it.

Posted by: JEinATL | December 17, 2009 10:45 AM | Report abuse

Ezra is right on the policy side but I think he totally misreads the politics.

When confronted with a mandate to buy unaffordable insurance, the public outcry will force politicians to do one of three things: A) remove the mandate; B) increase subsidies; C) reduce medical costs. Ezra clearly thinks we'll end up with some mix of B and C, and mostly lots of C (cost control). That is just not going to happen. The outrage this will generate, and which will so easily be exploited by opponents, will almost certainly result in dropping the mandate (and probably unravelling other parts of the deal). That plus a good dose of D) voting out the bums who foisted the thing on you in the first place. Doesn't anyone remember the late 1980s Medicate catastrophic care debacle?

It is true that in MA, precisely this dilemma has been pushing the state to try to impoe some cost controls (the HRC bill is basically Romney-care nationally). But it's not at all clear that's going to work and anger in MA is growing. And the politics of this in MA are vastly different: far more liberal state on average, far fewer people hit by the mandate in the first place (MA had fewer uninsured than average), and such strong one-party rule plus entrenched political machines that MA pols can take quite a bit of voter outrage without losing elections, let alone losing control to the GOP. That it was a GOP plan (Romney) in the first place enhances that.

Nationally, though, this will be a disaster for the Dems and Ezra's wonkish fantasy is simply not how the politics will play out.

Posted by: anon999 | December 17, 2009 11:06 AM | Report abuse

Ignorance.

Quoting "Single-payer in Canada.....None of these plans are "voluntary."

Really?

But there is universal coverage. No one one is denied a claim. The premium (if there is any) is the same for everyone in each province. There is no insurance company to deal with. There is no back ground check or form to deal with listing previous conditions. There is no fine to pay.

Before putting down plans in other countries, could Ezra spend some time and actually visit one? A car trip to Canada from Washington is about 8 hours. Faster by air. Do some investigative reporting
before writing some thing else in the future. You would do your readers a favour.

Canada, as all the other countries listed, spend less than the US and covers everyone.

Ignorance.

Posted by: seraphina | December 17, 2009 12:16 PM | Report abuse

Dear Mr. Klein,

You accurately describe the mandatory nature of plans in other industrialized countries. You even note that places that choose the "Private plans" route always include "heavy public regulation". What is missing from your post is a recognition that the current plan under discussion lacks the "heavy public regulation" aspect.

If you put a cap on insurer profits, a cap on insurance company executive compensation, outlaw rescission and discrimination based on preexisting conditions entirely, make premiums uniform for everyone (right now they could still vary on age I believe), and then add in a couple dozen more regulations I haven't thought of yet, then maybe an individual mandate would be acceptable. But making people buy insurance while the insurers get up to their old tricks is totally unacceptable, and that's what they're heading towards now.

Insurers should hate this bill. They should be screaming that it will turn them into utilities, because that's what the bill should do. Right now they're not. They're licking their lips about all the new customers they're going to get. I can't believe you think it's a good idea.

Posted by: prague_one | December 17, 2009 1:10 PM | Report abuse

Put a gun to that tri-athlete's head, Klein, and *force* him to pay for someone else's care. It's the new American paradigm.

Posted by: msoja | December 17, 2009 1:17 PM | Report abuse

ps. Even Kos is calling you a liar, now, Klein. Could it be because you're like, you know, dishonest?

http://www.dailykos.com/storyonly/2009/12/17/815568/-Insurance-premiums,-lack-of-cost-controls,-and-the-great-Massachusetts-experiment

Posted by: msoja | December 17, 2009 1:18 PM | Report abuse

There is an approach other than a mandate that offers potential for encouraging everyone to purchase insurance. Two Medicare programs--Part B and Part D (the drug program) are not compulsory BUT if the beneficiary does not sign up--i.e. purchase these programs when the programs are fist available to him/her, the premium costs go up. The late enrollment penalty for Part B is 10% for each year you could have had the coverage but elected not to purchase it; for Part D the penalty is 1% for each month you could have had the coverage and chose to decline. These are powerful incentives for buying in when you are first eligible. Perhaps some form of this would work for the under 65 crowd. Assess penalties for the noninsured should he/she ever need to buy insurance. Most of us can foresee needing insurance at some point in our lives. Facing insurance premiums double or triple the average might be just the stick needed.

Posted by: DorothyMonroe | December 17, 2009 2:42 PM | Report abuse

--"Facing insurance premiums double or triple the average might be just the stick needed."--

Hit your neighbor with a stick.

It's the new American paradigm.

Posted by: msoja | December 17, 2009 3:05 PM | Report abuse

This bill is so piss poor--basically a vague promise to control costs--that the mandate is immoral.

Posted by: bmull | December 17, 2009 5:06 PM | Report abuse

Ezra, the rub in this case is the delay between when the mandate kicks in, and when, "politics that forces Congress to make the hard decisions that lead to cost control." How many years of increasing yelling and screaming might pass before Congress acts on said yelling and screaming? For the people caught in the squeeze--tens of thousands?--it would be a disaster.

Posted by: dougom | December 17, 2009 8:45 PM | Report abuse

I completely understand the point of mitigating risks by getting everyone into the risk pool. I agree that none of us knows when our own day of need will come, so it's only fair to join in that pool rather than being "free riders." And I recognize the potential of an "insurance death spiral" (although, as another poster points out, it's just a possibility, not a guarantee).

HOWEVER.

There are a few things Ezra fails to acknowledge. One: if the current status qup hasn't put enough pressure on Congress to impose real cost controls (all of which have been methodically stripped from the bill), then it's sheer fantasy to imagine that any future circumstances would do so. Two: without cost controls, all the risk-managing benefits of this mandate accrue to the insurers, not the customers; even the subsidies are no help, as the insurers can and will merely increase premiums to capture them as profit. Three: as others have noted, the (few) other countries that still allow a private insurance market regulate it VERY tightly; the U.S. Congress has not demonstrated the will to do that, nor the ability to enforce such regulations on other industries.

What it comes down to, is that a for-profit business model for insurance contains an inherent conflict of interest. To quote another poster, the fact is that we CAN'T "trust insurance companies to ever provide quality coverage. ...no matter what regulations are in the Senate bill, insurers will find a way to deny treatment."

IMHO that conflict is unconscionable. So much so that if Ezra's slippery slope were to develop and a "death spiral" rendered the private insurance industry unprofitable, frankly that would be a GOOD thing. Then Congress would have no choice but to REALLY cover everyone.

Speaking as someone who's currently uninsured: I would cheerfully pay twice as much in taxes for guaranteed, reliable public health coverage. But I won't pay a nickel to enrich the bottom lines of private insurance companies.

Posted by: chrisj2 | December 18, 2009 7:07 AM | Report abuse

Dear Mr. Klein,

Currently, I have a very decent health insurance program for me and my family. Due to the rule that no one can be denied coverage due to pre-existing conditions, I am considering leaving my current health insurance program and buying the cheapest program I can find that satisfies the individual mandate - saving me thousands of dollars a year (a large percentage of my current income) in insurance premiums. If my family or I get sick, I will then upgrade to a plan with more benefits and more extensive coverage.

Is there anything in this bill that would prevent me from doing that?

Posted by: chrisheatonspam | December 20, 2009 10:50 AM | Report abuse

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