Saturday, January 23, 2010

Individual mandate

Apparently the most unpopular part of the Democratic health care reform proposals is the individual mandate. Kevin Drum claims:

And the least popular feature? The individual mandate, by a landslide. It's even less popular than the $900 billion cost, which is pretty remarkable. Unfortunately, the whole plan falls apart without a mandate, so there's not much we can do about that. Just learn how to explain adverse selection to your relatives when you're trying to sell them on the plan, OK?

However it would be easy to devise plans without an individual mandate. The requirement for a mandate is the consequence of the following liberal beliefs about health insurance.

1. Everybody should be covered.
2. Everybody should pay the same rate.
3. Everybody should receive the same, gold plated, coverage.

The primary reason liberal plans have a mandate is that liberals want everybody to be covered whether they want to be or not. Without a mandate some people will choose not to buy insurance. The number of such people is greatly increased by incorporating the other liberal beliefs in designing plans. Charging everybody the same rate means some people are being greatly overcharged making them more likely to want out. Similarly some people who would voluntarily buy cheap insurance will balk at being forced to buy expensive gold plated plans.

There are numerous ways to encourage people to voluntarily buy insurance compatible with basic economics. Such plans would not lead to everybody being covered but neither will a plan that can't get through Congress.

1 comment:

  1. How, I wonder, do the "numerous ways to encourage people to voluntarily buy insurance compatible with basic economics" deal with the following problems:

    (1) Despite the encouragement to do otherwise, "some people will choose not to buy insurance," and significant numbers of them will later experience serious illnesses or injuries that will exhaust their savings. Is society then left with an unhappy choice between (a) bearing the cost of their foolish risk-taking by paying for their future medical expenses or (b) hard-heartedly condemning them to disability or death by withholding further treatment?

    (2) Will everyone be treated equitably (unlike today) by being given the same opportunity, before developing any pre-existing conditions, to buy insurance with comparable coverage at comparable rates and with no penalties for future illnesses or injuries?