Eric Hanneken's Library tagged mandate → View Popular

16 Dec 09

Crafting the private-sector mandates such that they fall just a hair short of CBO’s criteria for inclusion in the federal budget does not reduce their cost, nor does it make those mandates any less binding. But it dramatically reduces the apparent cost of the legislation. It is the reason we’re all talking about an $848 billion Reid bill, rather than a $2.1 trillion Reid bill.

If someone sold you a house, or a car, or a mutual fund this way, we would put them in jail.

06 Nov 09

The proposals now before Congress would require just about everyone to buy health insurance or to get it through their employers — which would generally result in lower wages. In other words, millions of people would be compelled to spend lots of money on something they previously did not want, at least not at prevailing prices.
A subtler problem is what economists call “implicit marginal tax rates.”
The fiscal reality is that not all income groups can receive equal subsidies; as a family earns more, its subsidy would probably decrease, eventually falling to zero. But then we are taking money away from the poor as they climb into higher income categories. This is a disincentive to earn more, and the strength of the disincentive increases with our initial generosity.
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- A further problem is “mandate creep,” which we’ve seen at the state level, as groups lobby for various types of coverage — whether for acupuncture, alcoholism and fertility treatments, for example, or for chiropractor services or marriage counseling.
- We’re often told that America should copy the health care institutions of Western Europe. Yet we’re failing to copy the single most important lesson from those systems — namely, to put cost control first. Instead, we’re putting our foot on the gas pedal and ratcheting up the fiscal pressures on the system, in the hope that someday, somehow, it will all work out.

05 Nov 09

What industry
wouldn’t welcome a law that forces everyone to buy its product?
But the insurers also argue that a mandate will help
control costs, and the president agrees. Judging from the
experience in Massachusetts, which imposed its own insurance
requirement in 2006, they’re both wrong.
There are several reasons why mandatory insurance, contrary to
Obama’s promises, has been accompanied by rapidly escalating
costs. First, when you subsidize something, people tend to
consume more of it.
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- Second, despite stricter penalties, Massachusetts seems to be
  experiencing adverse selection. Tanner notes that, while the
  share of residents without insurance has shrunk from about 10
  percent to about 5 percent, the proportion of uninsured people in
  the 18-to-25 age group has increased from 30 percent to 35
  percent, indicating that “the young (and presumably more healthy)
  are less likely to comply with the mandate.”
- Third, requiring people to buy insurance entails defining the
  minimum level of coverage, which necessarily makes insurance more
  expensive than it would otherwise be. In effect, the government
  prohibits the cheapest insurance plans, the ones with the highest
  deductibles and the least generous benefits.

24 Sep 09

the true annual cost per family is more like $200, with uncompensated care accounting for "less than one percent of private health insurance costs."
What about the young and healthy (or middle-aged and wealthy) person who decides insurance is not worth his money but pays all his medical expenses out of his own pocket? His choice does not impose costs on anyone, but under Obama's plan he would still be punished for it.
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- The real reason Obama insists upon making the young and healthy buy insurance they don't want is not the relatively minor free rider problem but the potentially ruinous adverse selection problem: The most expensive patients are the ones who are most likely to sign up for coverage. To keep the official 10-year price tag of his plan below that magical $1 trillion threshold, he needs to balance sick people who rack up big bills with healthy people who pay for insurance but don't use it. Instead of acknowledging this reality, Obama portrays the healthy uninsured as irresponsible leeches.

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