You know it’s bad when MIT is calling bullshit on you… More on the case for Individual Mandates

I don’t normally post full entries from other blogs, but Ezra Klein received a letter from MIT’s Jonathan Gruber, one of the countries leading health care economists, in which he disputes the grossly erroneous article run by the NYT which attacks Hillary Clinton’s arguments against Obama’s health care plan.

I was surprised and somewhat offended by the lack of balance in the article by Katharine Q. Seelye in today’s Times (“Clinton Attack on Obama Overlooks Some Realities”). The health plans of Hilary Clinton and Barack Obama differ in a number of respects, but most important is the fact that Clinton includes a requirement that individuals purchase insurance. Virtually every health expert in the nation would agree that such a requirement is necessary for universal insurance coverage within our private insurance-based system. As a result, Clinton correctly pointed out that Obama’s plan would leave the nation far short of universal coverage. The 15 million estimate that she used was validated by myself and other experts, as detailed in Jonathan Cohn’s recent post on the New Republic’s web site. In recent days advisors to the Obama campaign have made a series of incorrect attacks on the claim that Clinton’s and John Edwards’ plans would cover more Americans than theirs. Ms. Seelye’s article simply parrots these incorrect attacks.

She first points to the figure from the Insurance Research Council that states that 15% of drivers are uninsured. As detailed in research by J. Daniel Khazzom (paper available at here), this figure clearly overstates the rate of uninsured drivers by computing this rate as the share of accidents in which the driver did not have insurance. But since uninsured drivers are typically from groups that are more accident-prone, the share of accidents involving the uninsured will clearly overstate the share of drivers that are uninsured. Moreover, state reforms to improve compliance with auto insurance requirements have been very successful, with the rate of uninsured drivers (measured appropriately) in Georgia recently falling to 2%.

She then cites the experience of Massachusetts, where I serve on the Connector Board that is implementing our ambitious health reform passed in 2006. She correctly points out that, as part of a compromise last year, we exempted almost 20% of uninsured adults from mandated coverage. But half of these are low income individuals offered employer insurance who can be covered as part of the law, but for whom we have not yet had time to design an appropriate subsidy program. The other half are individuals above three times the poverty line who are excluded from subsidies through a compromise between then Governor Romney and our legislature. If subsidies were extended further, exemptions would have been unnecessary. Candidates Clinton and Edwards have said that under their plans all individuals would be subsidized so that no one has to pay an unaffordable amount for insurance. She has laid out no specific plans for mandate exemptions, and there is no reason why she should be tarred by what we have done under the constraints of our Massachusetts law.

As Ms. Seelye highlights, the 15 million figure is not a precise estimate. But the general point should not be lost in the debate over the numbers: a plan with an individual mandate will cover millions more individuals than a plan without an individual mandate. There can be legitimate debates over whether a mandate is necessary or not. I personally feel that it is necessary to prevent free riding in our health care system, to ensure fluid functioning of insurance markets, and to ensure that all citizens are protected against health risk. At the same time, I can also respect, while disagreeing with, Candidate Obama’s decision to exclude a mandate. But there can be no debate over the fact that a mandate is required to bring us to universal health insurance coverage in the United States, and that a plan without a mandate will leave us far shorter of that goal than any plan with a mandate, proper subsidies, market reforms, and sensible enforcement rules.

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