Mandate Alternatives

Donald Trump will personally ask everybody to buy insurance, really really nicely. And if they push back, he will offer them $7 million in tax incentives.

Or maybe everybody who has coverage will be entered into an annual lottery where someone will win $big$bucks$.

Or we can bring back the draft and weight selection against those who do not have coverage.

Not talking electoral mandates—those are apparently a dead concept, circa 1980s. Talking about the health insurance mandate.

So, first we should understand that the Obamacare mandate is meant to serve two purposes:

  1. Avoid having too few young and healthy people so that the pool can pay for the care of the sick members.
  2. Avoid having too many people without insurance that end up needing care.

Insurance isn’t just for old people. It’s also for the random event. Young people lacking insurance raises the cost of the whole healthcare system one of them gets a sudden illness they can’t pay for.

The problem with the Republican alternatives so far is that they tend to only address the first purpose: making sure that the pool is mostly healthy. They tend to do this by creating high-risk pools. These pools are government-subsidized so that the regular market is free of the sickest folks.

The Republicans are calling for a form of socialized medicine whereby the worst costs are still borne by taxpayers, while the artificially-healthy market is free to line the pockets of insurers.

Now, such a scheme could work. It’s just that the Republicans will not be willing to take it to its logical conclusion: creating one risk pool (either nationally or per state) for all catastrophic coverage, and relegating health insurance to something more like an add-on that helps pay for the first 10-20% of coverage only. This is more like the risk equalization pools used in parts of Europe, and those still require young people to carry insurance.

Indeed, one expects that if the high-risk-pool system is put back in place, there will be a strong incentive for future governments to expand it into a full-on single-payer system. Historically high-risk pools have been underfunded, leading to higher premiums and deductibles. Their existence was one of the motivations for health insurance reform (i.e., Obamacare) in the first place.

Now that we’ve had a first round of insurance reform, one expects that the government will be compelled to repeatedly reform it until they get to a system that works. People will not be content to let this go, as tens of millions lose insurance, the systemic uncertainty grows, and all the while the corporations produce record profits. There will be pressure to keep fixing this system.

The Republicans don’t really try to tackle the enrollment problem, the fact that a lot of young people will tend not to buy insurance. They seem to believe, for some unclear reason, that if you make insurance cheaper it will entice young people to act responsibly (despite the fact that it’s already relatively cheap for them). It just doesn’t work that way. Coverage is not on their radar. Unless and until health insurance becomes a fashion statement, don’t expect the youth to seek it out.

Thus, it seems implausible that there exists an alternative to a health insurance mandate (taken-as-read that single-payer is a mandate too).