The Road to Universal Coverage
in the Wall Street Journal, by Robert B. Reich, 9 January 2008

Democrats should be celebrating. Their three major candidates have put health insurance front and center on the domestic agenda, and with plans that are remarkably similar. They've done so at a time when the public seems readier than ever before to embrace universal health insurance, and readier to trust a Democratic president to put it into effect.

But instead of celebrating, the candidates and left-leaning pundits are squabbling over whether the plans should include so-called mandates that require everyone to purchase health insurance. Talk about self-inflicted wounds. Mandates are a sideshow, and fighting over them risks turning away voters from the main event.

In almost every important respect, all major Democratic plans are the same. They require employers to "play or pay" -- either provide coverage to their employees or contribute to the cost of coverage. They create purchasing pools that will offer insurance to anyone who doesn't get it from an employer. The plans preserve freedom of choice of doctors. They aim to save money through more preventive care, better management of chronic disease, and standardized information technology. All of them subsidize lower-income families.

Despite some skirmishing over whose subsidies are most generous, the subsidies are about the same. The major Democratic plans would spend nearly an identical amount of money helping low- and middle-income families because they rely on the same source of general revenue, derived from allowing the Bush tax cuts to expire. Given the myriad ways universal health insurance might otherwise be organized -- single payer, employer mandate, health-insurance vouchers, tax credits -- this Democratic consensus is striking. It also highlights the abject failure of Republicans to come up with any coherent plan.

Take a closer look and even the candidates' positions on mandates aren't all that different. John Edwards has proposed to automatically enroll people in health insurance on their tax returns, but has said this mandate won't apply until premiums are affordable. Hillary Clinton says she favors mandates, but isn't sure there should be a penalty for noncompliance. Barack Obama favors an immediate mandate for children, but doesn't include one for adults. He says he's willing to revisit the issue after making health insurance more affordable and enrollment easier, and is also considering an automatic enrollment with an opt-out for those who don't want to be included.

As a practical matter, the difference between Sen. Clinton's and Sen. Obama's approaches come down to timing and sequencing. Mrs. Clinton wants a mandate first, believing that enrolling the younger and healthier will help reduce costs for everyone else. Mr. Obama thinks forcing people to buy health insurance before it's affordable isn't realistic. He wants to lower health costs first, and is willing to consider a mandate only if necessary.

This fight is little more than a distraction, given that a mandate would matter only to a tiny portion of Americans. All major Democratic candidates and virtually all experts agree that the combination of purchasing pools, subsidies, easy enrollment and mandatory coverage of children will cover a large majority of those who currently lack insurance -- even without a mandate that adults purchase it. A big chunk of the remainder are undocumented immigrants, who aren't covered by any of the plans.

Who's left? Only around 3% of the population. So the question they're really battling over is whether it's better to require this 3% to buy insurance, or lure them into buying it with low rates and subsidies.

The answer depends on who's in this 3%. Mrs. Clinton thinks they're mostly younger and healthier than the general population so they should be required to buy health insurance. That way, they'll bring costs down for everyone else because their payments will subsidize the others.

Mr. Obama thinks a lot of them are people who won't be able to afford even the subsidized premiums, so they'd either ignore a mandate or wouldn't be able to pay for it. He says if his plan gets 97% coverage without a mandate and he finds that the remaining 3% are mostly young and healthy, he'll go along with a mandate.

Who's correct? It's hard to know. So far, the Massachusetts experiment suggests Mr. Obama. Massachusetts is the only state to require that every resident purchase health insurance. The penalty for failing to do so could reach $4,000 next year, but the state has already exempted almost 20% of its current uninsured from the requirement. Massachusetts is concerned they can't afford a policy, even with subsidies similar to those in all the Democratic plans. So far, about 50% of Massachusetts's uninsured have complied with the mandate.

A mandate may not make much difference anyway. Columbia University professor Sherry Glied and her colleagues investigated health-insurance mandates now in place in Switzerland and the Netherlands. They report in the November-December issue of Health Affairs that mandates can, but don't always, increase coverage. Whether they do depends on the cost of complying with them and the penalties for not doing so. Overall, they found, the effects of mandates largely reinforced existing high levels of coverage. Switzerland now enjoys near-universal coverage, but this reflects only a tiny increase over the rate of coverage before it was mandated, when over 98% of population had mostly voluntary coverage.

It's expected that gloves will come off in the last months of a primary campaign. But by warring over mandates, Democrats are leading with their chins. It's the least important aspect of what they're offering. It's also, to many Americans, the least attractive because it conjures up a big government bullying people into doing what they'd rather not do.

The public is ready for universal health insurance, but getting any plan through Congress will still be tricky. To get it enacted after January 2009, Democrats need to start building a movement in support of the big and important reforms universal health insurance requires -- and on which they happen to agree.