Individual Mandate

Economic decisions are rarely the product of a simple costs-benefit analysis. This is particularly true of the decision to purchase health insurance, where the costs are upfront and certain, while the benefits are uncertain and down the road.

Requiring that all Americans purchase health insurance confronts this challenge, and it is a central aspect of the current health reform legislation in Congress. The so-called individual mandate is necessary to make other insurance market reforms like community rating and guaranteed issue work. Coupled with subsidies to make insurance affordable, the individual mandate can be an effective tool for coverage expansion.

The debate in Congress focuses mostly on whether the penalties for not purchasing health insurance ($750 in the Senate Finance Bill) relative to the coverage subsidies are enough to actually influence people's decisions. The success of an individual mandate, however, depends on more than just subsidies and fines, and Monday's Washington Post lays out some important lessons from the field of behavioral economics.

One of the central insights of behavioral economics -- reflected in recent books like Nudge, which was co-authored by the White House's Cass Sunstein -- is that the choices we make are often determined by how easy it is to make them. As Brookings' William J. Congdon tells the Post:

Details are firming up in the merged Senate health care reform bill, reports The Wall Street Journal (subscription required). Here's a preview of major provisions that appear to be highly likely to make it into the final bill:

Public option. The Senate bill will contain a public option, reports the WSJ, but states can opt out. Reid came out in favor of a public plan with an opt out last week, according to The New York Times. Some theorized the White House preferred a "trigger" for the public option,  appealing to moderates like Olympia Snowe (R-ME). But the White House Blog said that President Obama and Reid are pursing the same strategy, and the president supports both a public option and Reid's efforts to create a final Senate bill.   

When Bill Frist was Senate Majority Leader, he did not advance the cause of comprehensive, bipartisan health reform and will be remembered for his role in the Schiavo case (although he did take heat for working with Democrats to expand federally-funded stem cell research). Mostly he pushed for malpractice reform (in a very partisan model) and for small business purchasing pools (also from a GOP perspective).  If there were compromises to be had under his watch, he didn't have them.

Better late than never.

We've watched Frist over the past few months. As we've noted, he has backed a fairly expansive approach to prevention and population health, and recently endorsed the individual mandate (which was a centrist Republican idea before it became a Democratic idea). Now he tells Karen Tumulty of TIME that he'd vote for the Democratic health care reform bill in Congress -- even if there's a lot in it he isn't crazy about. (He later told ABC News Radio that he doesn't like the Baucus bill as currently drafted, according to the Politico.) 

The Wall Street Journal has an editorial out Wednesday purporting to tell the truth about health insurance reform -- an admittedly hard thing to find these days.

Not surprisingly, the conservative editorial board opposes proposals for guaranteed issue and community rating. Such reforms, where implemented, have raised costs, the Journal says.

Ironically, in attacking these reforms, which are designed to make the individual insurance market more affordable and fair for all Americans, the Journal is really making the case for an individual mandate.

Yes, "if insurers are forced to sell coverage to everyone at any time, many people will buy insurance only when they need medical care," which is precisely why every comprehensive health reform proposal being discussed, requires all Americans to purchase health insurance. Yes, community rating could lead to adverse selection, unless all individuals, healthy and sick, old and young, are required to purchase health insurance.

Most people want to have health insurance -- and many people desperately need it. That's part of what's driving the push for health care reform legislation. But as more Americans realize that health care reform means that they MUST purchase health insurance, more people are asking whether this "individual mandate" is constitutional. Over and over again, we hear that it is and we shouldn't worry our wonky heads over this relatively non-controversial issue. (I'm a lawyer by the way so my head is both wonky and legalistic -- I actually like thinking about things like the constitutionality of mandates).  

Tim Noah just wrote a well-researched piece in Slate about this issue.  Tim found that an individual mandate is unprecedented -- which is what we concluded when we started asking around and thinking about this. Whenever you have the federal government issuing a brand new edict you're going to have controversy (think about the laws governing voting and drinking ages...).  But this is the first time that the decree is contingent on just being alive and an American -- it is not tied to a privilege (owning a car) or doing something wrong (thieves go to jail).

Senate Finance Chairman Max Baucus and ranking Republican Chuck Grassley just released the second installment of their health care policy options—this one on covering all Americans. Yes, the public plan is part of the mix, but it takes a few different possible forms. An individual purchase requirement or mandate is also in there. So are insurance market reforms and a standard benefit package that human beings can actually understand is in there. We haven't read through the whole document yet but wanted to bring it to your attention. Please note that Baucus and Grassley aren't endorsing everything that's in the document, but they are setting parameters for a serious and wide-ranging discussion.

Tomorrow, the Senate Finance Committee will host a roundtable discussion on financing comprehensive health care reform. As always you can follow our coverage of the event on Twitter (tag: #SenFin).

The Hope Street Group, a nonpartisan, ideologically diverse group of business and policy leaders, has agreed on a core set of  health reform principles aimed at comprehensive reforms that will create a system that is both more economically sustainable and socially equitable.

Here are the 8 main points (in abbreviated form... for more nuance, click the link above)

1. High quality, affordable basic health care coverage for all, including preventive care
2. New payment and incentive models to promote coordinated care and reward higher value and better   outcomes
3. Faster generic drug introductions
4. Strengthen primary care and prevention to improve public health
5. Establish a comparative effectiveness entity with dissemination authority
6. Quality and price transparency  to help people make informed, value-conscious decisions.
7. Promote investments in "wiring" the health care system
8. Promote a health care system that is both fiscally responsible and sustainable, for both the private and public sectors

In drafting ballot initiatives, sponsors often face a choice. They can give their measure a better chance of winning by making it vague. A specific provision is easier to attack. But vague provisions often provoke legal challenges that block successful initiatives from taking effect. Such may be the case with Arizona's Prop 101, the ballot initiative designed to prevent the sort of health care reforms passed in Massachusetts and pursued in California. (Speciifically, the initiative bans the state from requiring people to get health care coverage, and would seem to bar a single-payer system). In this Arizona Republic story on the measure, critics suggest the initiative is so ambiguous that its real meaning might be decided in the courts.

And now the head of the state's indigent care system suggests the initiative, if passed, would force his department to close.

If you were paying attention to your health care headlines recently, you might have doubled back for a second look at this caption: "Gingrich suggests insurance mandate for some." Huh? Is Newt Gingrich thinking seriously about a requirement to purchase health insurance? Is that a typo? No.

Let's recap. At an Alegent Health event in Omaha, the former Speaker of the House suggested that a strategy to combat high health care costs should include a requirement that people who earn more than $75,000 a year purchase insurance. According to an AP story, Gingrich said it was, " ‘fundamentally immoral' for a person who can afford insurance to save money by going without, then show up at an emergency room and demand free care."

This is in keeping with some Gingrich's past comments about individual responsibility in the context of health reform. In a June 2007 opinion piece in the Des Moines Register, he said:

DEPARTMENT OF MOON HOWLING: The Las Vegas Review & Journal takes a long look at one of the country's more important signature firms, National Voter Outreach and its CEO Rick Arnold. I've interviewed Arnold in his Carson City home, and found him to be one of the more thoughtful people in the petition trade, critical of its problems and clear-eyed about its limitations. This story is built heavily around criticism from the liberal/progressive Ballot Initiative Strategy Center, which is quick to lable signature gathering as corrupt (at least in cases where it opposes the cause in question). There is a "shocked, shocked" quality to this criticism. The signature gathering business has plenty of problem workers, many of them poorly trained folks who, for lifestyle reasons, have taken a job that usually pays them in cash. But BISC and other critics invariably propopse to criminalize the process of gathering signatures, as in Oklahoma. In supporting these restrictions, liberals are hurting themselves, by establishing precedents restricting political speech that can be used by their political opponents. And such restrictions don't stop direct democracy. They merely slow it down, adding to the costs (and thus the influence of interest groups) that progressives love to denounce. The more you regulate, the more firms like National Voter Outreach will benefit.