Dateline: Feb. 4, 2008
Paul Krugman today bashes Barack Obama in the pages of the New York Times. Obama opposes mandates for individuals to buy insurance, Clinton supports them. Krugman heaps contempt on Obama for not understanding the obvious problem
... the big difference is mandates: the Clinton plan requires that everyone have insurance; the Obama plan doesn’t.
Mr. Obama claims that people will buy insurance if it becomes affordable. Unfortunately, the evidence says otherwise ...
An Obama-type plan would also face the problem of healthy people who decide to take their chances or don’t sign up until they develop medical problems, thereby raising premiums for everyone else ....
Krugman continues:
Jonathan Gruber of M.I.T. ... finds that a plan without mandates, broadly resembling the Obama plan, would cover 23 million of those currently uninsured, at a taxpayer cost of $102 billion per year. An otherwise identical plan with mandates would cover 45 million of the uninsured — essentially everyone — at a taxpayer cost of $124 billion. Over all, the Obama-type plan would cost $4,400 per newly insured person, the Clinton-type plan only $2,700.
Krugman is referring to the problem of "adverse selection." And by the way, he never mentions a "public option" as a necessary component of the plans.
At this time (in 2008), everyone understands that "mandates," (with exceptions for affordability and subsidies for the poor and working classes) are the progressive position, whereas Obama is, typically, taking a less progressive position.
But I tell my progressive friends not to worry. Once Obama takes office, he will quickly understand that substantially reducing the number of uninsured, and ending the practice of "pre-existing conditions," is impossible without mandates. Krugman's logic is inescapable, and so we won't escape it.
Dateline: Dec. 16, 2009
Hey, I was right. Obama, together with the progressive policy bloggers that make up the liberal "wonk-o-sphere," and nearly all the progressives serving in Congress, understand the arguments for mandates.
But, ummm, they turn out suddenly to be the kiss-of-death in the "political activist" part of the liberal blogosphere.
So, all the folks who study policy full-time-ish are in favor; the activists are not just opposed, but furious. There is no reason for mandates except to increase the profits of the insurance companies! Sellout!.
Sorry, Prof. Krugman. Lesson not learned.
Of course, this disconnect drives the "wonk-o-sphere" guys crazy as well. Nate Silver drops the phrase "batshit crazy."
Assignment: Discuss this Disconnect
Keep in the mind the following facts.
-- The regulate, subsidize, mandate plan is working pretty well in MA right now. It greatly increases coverage (and actual medical services rendered) and it is pretty popular. If your comment, theory, or prediction doesn't accommodate the facts of what is happening in MA right now, then your comment, theory, prediction should not be welcomed in the reality based community..
In the Senate bill (the House bill is much better)
-- Poor folks face no mandate, they are enrolled in Single-payer Medicaid.
-- Subsidies greatly decrease the cost of insurance for those somewhat aobve the poverty line. Nate Silver estimates that, vs. the status quo in many states, subsidies reduce insurance costs by half for a family making 54,000 in 2016. (That's only one reason he thinks you are batshit crazy.)
-- If the "bronze" insurance plan (which has specific defined minimum benefits and medical pay-out ratios, again better in the House bill) costs more than 8% of your income, you face no mandate.
-- If [a] you can buy bronze-plan insurance for less than 8% of your income, [b] you are not poor or near poor and [c] yet you still decide you want to "free-ride" on the rest of us by not buying insurance, you as an individual can pay $750 and buy your way out of the system. Your free ridingn is very costly to the system, by the way, because under community rating (as Krugman points out), you can later join the system after getting sick, driving up everyone else's rates. Keeping the fine at $750 is a huge subsidy to those voluntarily uninsured who stay out of the community rated system.