Monday, June 11, 2007

The Mandate Myth--Health Reform Plans Don't Have to Mandate Coverage to Work But They Do Have Be Affordable

As the presidential candidates, Republican and Democratic, begin to come forward with their health reform plans, a side debate is heating up about whether any meaningful health care reform plan has to have a mandate, individual or employer.

The reasoning goes that for health care reform to work we need to get about everyone in the pool--both in order to solve the uninsured problem and to be able to adequately spread the cost of health insurance across as many people as possible.

We do need to spread the cost of insurance over a big pool to get the best cost structure--a pool that isn't just populated by the old and sick and therefore one that costs a lot.

However, the notion that we have to either mandate that all individuals buy coverage--or that all employers provide it--is a myth.

Today, there are a number of health insurance pools that are large enough to provide an optimal spread of risk. Each of these pools is voluntary--not mandatory:
  • Most employer plans. No employer requires all employees to join their health plan. All employer health plans are voluntary. Yet employer after employer--many self-insured with just a few hundred participants--have very efficient programs.
  • The Part D Medicare drug benefit. The plan is voluntary and enough people have signed up to make it workable.
  • Part B of Medicare. The portion of Medicare that covers physician and other non-hospital costs is voluntary and almost all seniors sign up for it.
Each of these voluntary health insurance plans works quite well without any individual mandate.

However, each of these plans is affordable. Employers typically pay at least 75% of the costs for their employees. The government pays 75% of Medicare Part D and Part B costs.

So, it's simple.

The problem is not making people buy coverage--the problem is making health insurance coverage affordable. Massachusetts learned that this year when they first tried to mandate that all citizens buy health insurance but had to back-off because they couldn't produce a health insurance plan that everyone could afford.

If you make health care affordable enough people will come to adequately populate the insurance pool.

The challenge is not to force people to buy health insurance. The challenge is making it affordable so they can.

Many are now focusing on whether or not Barack Obama, John Edwards, Hillary Clinton, Rudy Giuliani, or any of the rest, have a mandate in their health reform plans.


What we need to focus on is how are they going to make health care affordable.

It's the costs, stupid!

Related posts:
Giuliani Set to Announce a Health Care Proposal--But He Has to Make it Affordable for Everyone

Deja Vu in Massachusetts--We've Been Down this Road Before--The Massachusetts Health Care Plan and Health Care Costs

It's the Cost of Health Care Stupid!!!
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