What Difference Does A Mandate Make, Really? The Numbers Don't Add Up...

Opponents of "Obamacare" were popping champagne corks just before Christmas, when a federal judge in Virginia rules that the individual mandate, a central element of the legislation, exceeded the regulatory authority granted to Congress under the Commerce Clause.

Supporters of the plan were predictably dismissive, though they warned that, absent a mandate, an insufficient number of new, young, healthy people would be brought into the insurance system, there could be little prospect for keeping insurance costs under control in the Brave New World.

I have preached against the imposition of mandates for many years, but not out of any cockeyed notion of individual liberty. I believe that a mandate would not achieve the stated policy goal of the plan's advocates, and would, in the long run, have the opposite effect, leading to acceleration of health insurance costs and even less emphasis on quality than is the case in the current morass we call a system.

Because I don't think the numbers add up. I'm not an actuary, so maybe somebody out there smarter than I am will correct my mere layman's understanding.

Let's assume for a moment that the total number of Americans lacking health care coverage is about 50 million (an increase of about 30% from the "37 million uninsured" which led to the enactment of HIPAA, which was supposed to "fix" the markets for small group and individual insurance...And how did THAT work out?...).

For about half that group, "uninsuredness" is not a permanent state. For about 25 million uninsured Americans, the condition is transitory, lasting six months or less, because they're between jobs. So they have some short-term exposure, but the market will take care of them.

That leaves 25 million.

It's estimated that a third of that group consists of "young invincibles," workers under age 30 who have not purchased coverage, either because they think they don't need it or because they can't afford coverage; often they can't afford coverage because pre-existing health conditions have made coverage for them very expensive, if they can get it at all. Theoretically, these are the people whom policymakers want in the system, on the notion that, in general, they'll use less in medical services that they'll pay for in premiums.

Getting them into the health insurance system might easily be accomplished through health insurance exchanges, with subsidies to make coverage more affordable (Note: community rating has a big effect on these young folks' premiums. In Ohio, a healthy 25-year old can purchase coverage for about $150 per month, because of age-based underwriting. In New York the cost is about triple that).


That leaves 16-17 million people.

About half that number represents working families who currently earn too much to qualify for coverage under Medicaid, but not enough to afford insurance premiums. I think that expansion of children's health coverage, and the institution of premium subsidies, help these families get into the system.

That leaves 8-9 million people who currently can't obtain coverage at any price because of pre-existing health conditions. They've had a helluva time finding coverage, but it's not as if they're not trying. A study by the Commonwealth Fund concluded that only about nine percent of those applying for health coverage in the individual market are able to obtain it, because their health conditions either render them uninsurable, or because they rates they're offered are out of reach.

Aren't we making pre-existing conditions go away, and extending premium subsidies to these individuals through exchanges, as well?

Most of the folks I know in this category are either desperate to acquire coverage, or struggling to obtain it.

So who's left? Where are the millions of slackers who refuse to purchase coverage, even when it's available to them at a relatively affordable price?

Is it reasonable to expect that premiums generated by bringing in the "young invincibles" will come anywhere near offsetting the cost of bringing in the 7-8 million older, sicker people who now can't purchase coverage at any price?

Then there's the matter of price...or more precisely, the contention that mandating participation by everyone has the long-term effect of bringing costs down for everyone. I think this contention is nonsense. There's no evidence to support it, and in the few instances where evidence exists, it would seem to support the contrary position.

Many years ago, I had the chance to debate The Lion Of The Senate, Ted Kennedy, on the subject of making health coverage mandatory. As we discussed the issue, I asked him, "Pretend for a moment that everyone in America was required to purchase a Cadillac Sedan DeVille? Not just a car, but a big old Cadillac with all the options. What do you think would happen to the price of Cadillacs?"

The Senator answered that he thought the price would go down, because there would be so many more of them.

I suggested the contrary: not only would the price not go down, but there'd be no limit on the price of Cadillacs, because regardless of price, the government said you had to have one. And it wouldn't matter how well your Cadillac worked; the government didn't say your Cadillac had to work great, only that you had to buy one. Oh, and by the way, other carmakers? Competition in the car market? It would cease to exist.

That's the last time we spoke personally.

There is one state, Hawaii, which mandates that all citizens have health coverage. It's essentially a holdover from Hawaii's plantation days. In the early '70's, state government required that all health plans offer chiropractic services. In the ten years following enactment of the mandate, the number of chiropractors in Hawaii doubled, and the cost of chiropractic services tripled.

Think heath care costs are accelerating in hyper-drive now?...Wait till you have no choice but to buy a standard health plan, courtesy of Our Friends In Government.

I'm perfectly happy to be proved wrong. It just ain't happened yet...