MANDATES MANDATES MANDATES! I'm pretty unconvinced by Matt's case against mandates that TAP published today. The nut of Matt's argument is that "[i]n a world where every patient gets charged the same amount no matter how costly she is to insure, and every person must buy insurance no matter how little he wants or needs it, targeted marketing will determine everything. Advertising on television networks (G4) and magazines (Maxim) with young, male audiences will be a gold mine...The ideal approach will be to do a lot of slick marketing of your brand as "cool" while making sure that people who do careful research about their health-care options only learn bad things about your plans and service." There's little that's easier to fix than that. Reimburse insurers on a risk-adjusted basis, as they do in Germany, and you're done. It's a trivial fix to the problems Matt outlines, and one that's already in proven use in many systems. Indeed, his argument actually suggests that a mandate would be better, though not perfect: If what you have now are insurers discriminating on the basis of health history, and using advertising tricks, and denying to individuals they don't like the looks of, and refusing to cover preexisting conditions, and what you're going to have is insurers insuring everybody but trying to grab a few more healthy kids by advertising the G4 Tech TV (the 57th worst-rated cable network. Exactly how many folks does Matt think they'll pick up?), well, I'll take the latter. It's not foolproof, but forcing them to engage in really crude, heavily regulated, mostly blunted adverse selection is far better than allowing them to engage in very precise, very effective, and very wide-ranging adverse selection. Meanwhile, Matt's concern that plans will be built unfavorably is already moot -- every mandate plan I know of defines the minimum benefits, mostly in accordance with the Blue Cross/Blue Shield 2007 Standard Plan. There's no real way to undercut that with any ease. Garance's point falls prey to the same problem as Matt's: They're talking about a market failure that mandates help correct. She's concerned that, in Massachusetts, "most of those enrolling in partially subsidized programs are older and sicker. Without the younger, healthier people, costs will rise rapidly and the plans could quickly become unaffordable for everyone." That's largely as we'd expect. Indeed, that's exactly the concern with a program like Obama's, where there are subsidized plans but no mandates at all. In Massachusetts, though, the mandate addresses exactly this problem. If the young and healthy don't buy insurance by tax time (assuming I'm recalling the enforcement mechanism correctly), they'll face a penalty of around 50 percent the cost of a plan -- a penalty in the thousands. That's money that will go to subsidize the system, and incentivize these folks to buy in before the next tax period comes in and punishes them. Without a mandate, they'd have no penalty for eschewing coverage and would almost certainly abandon the old and sick in a premium death spiral. So will the mandate work perfectly? Maybe not, and lord knows I'd prefer government-provided, universal coverage, but if these are your fears, a mandate is a first step towards a solution. Without a mandate, you're screwed. --Ezra Klein
