Monday, September 17, 2007

HillaryCare versus Health Care

Hillary Clinton has announced a new health care reform plan. Its centerpiece is an individual mandate - a law that would require every individual to buy health insurance. This is a truly bad idea, which Clinton has cribbed from Republicans like Mitt Romney and Arnold Schwarzenegger (and, sad to say, even a few analysts who are generally friendly to free markets). I would bash the individual mandate here, but as it happens, I am ahead of the curve on this one: my article "Hazards of the Individual Health Care Mandate" appeared in the September/October issue of Cato Policy Report.

Something I don't mention in the article is why some free-market types support the individual mandate. In short, I think the reason is that they have given too little attention to the political dynamics of such a mandate, instead naively assuming that the mandate could be crafted once-and-for-all in a wise and lobbying-resistant fashion. The political incentives, including lobbying to expand the size of the "basic" benefits package and packaging of the individual mandate with other bad reform ideas, both figure prominently in the article. Notably, Clinton's new proposal contains at least two of those other bad reform ideas: employer mandates and community rating.


jabrwok said...

I figure if we're going to have some kind of government financed health system it should be a negative income tax with the money going into individual Health Savings Accounts. Use the money to buy your own health insurance, or not. Use it for non-elective medical procedures and prescription drugs. Don't let it be used for anything else. Let the kids inherit and either roll it into their own HSAs (tax free) or cash it out and tax it.

Unlikely to ever happen that way. Leaves too much authority in the hands of the citizens:-(

Dino William Ramzi said...

The idea of everyone participating in mandatory insurance is to expand the risk pool to improve affordability.

True enough, the political incentives to expand "basic coverage" is a sticky problem. The societal benefits lie in primary care, which has no credibility without the costs of specialty-driven technology.

If mandated insurance will work to achieve any goals, it has to be easy and inexpensive for everyone to participate.

rubyinparadise said...

just wanted to say thank you for an extremely well-written, well-reasoned article. i thoroughly enjoyed reading it (twice), and i've shared the link with many friends and acquaintances.

one thing that struck me while reading is that under and individual mandate approach, corporations will likely respond to skyrocketing premiums by ratcheting down the percentage of coverage for which they foot the bill-- thus cost-shifting even more of the price of health care onto their employees.

under such as system, the average American will pay three times: via subsidies, via lack of less expensive policies, and for those who get their coverage through their corporate jobs, via lower employer contributions.

truly a terrible, terrible idea. what is really insidious about it, is that it seems to punish the poor (an idea that appeals to conservatives), only truly punishes the middle class (an idea that appeals to the wealthy and corporations who are exempted from contributing), and at the same time appeals to knee-jerk liberals who don't do their homework, because they believe it's a "step towards" universal coverage. it is no such thing-- just the status quo, intensified.

Americans should understand that Romney, Schwarzenegger, Clinton and the like do NOT have their best interests at heart, and that a vote in their favor is a vote against their own best interests.