×
David Leonhardt misled readers in his column today discussing Senator Clinton and Obama's approaches to economic policy. He noted that Senator Clinton favored a mandate that requires people buy health insurance, while Obama opposes it. Leonhardt framed the discussion in the context of reaching universal coverage.Actually, even a mandate will not get to universal coverage, as Leonhardt notes. The purpose of the mandate is to prevent gaming of the system. If everyone has the option to buy into the system whenever they want, and to pay the same price regardless of any pre-existing conditions (a part of both candidates' programs), then healthy people have no incentive to buy insurance. They can pay minor expenses out of pocket and hold off buying insurance until a point where they actually do have major medical expenses.If everyone follows this pattern the system cannot work. It would be like allowing people to first buy auto insurance after they have an accident and then send the company the repair bill. The mandate gets around this by requiring that people buy insurance before they get sick. It is an anti-freeloader mechanism, not a route to universal coverage.It is worth noting that Senator Obama has more recently suggested that people who do not buy insurance when the plan is first offered will be penalized with higher rates if they subsequently enroll. If this penalty is well-designed it can prevent the sort of wholesale free-loading that can undermine the system.--Dean Baker
