Paul Krugman adopts a "Please, not in front of the kids" approach to his discussion of the back and forth between Hillary Clinton and Barack Obama on the merits of their respective health care plans:
The Mandate Muddle
Imagine this: It’s the summer of 2009, and President Barack Obama is about to unveil his plan for universal health care. But his health policy experts have done the math, and they’ve concluded that the plan really needs to include a requirement that everyone have health insurance — a so-called mandate.
...But Mr. Obama knows that if he tries to include a mandate in the plan, he’ll face a barrage of misleading attacks from conservatives who oppose universal health care in any form. And he’ll have trouble responding — because he made the very same misleading attacks on Hillary Clinton and John Edwards during the race for the Democratic nomination.
...lately Mr. Obama has been stressing his differences with his rivals by attacking their plans from the right — which means that he has been giving credence to false talking points that will be used against any Democratic health care plan a couple of years from now.
Let me summarize: Obama should not criticize Hillary now because it will only help Republicans later, after Obama realizes Hillary was right and he was wrong. My goodness - maybe he should just drop out of the race and spare his party the vexation of having to evaluate alternatives.
I do want to applaud Prof. Krugman for the candid title to his column - he really does his best to create a muddle on health care mandates. Here we go with his list of Obama's "false" talking points:
First is the claim that a mandate is unenforceable. Mr. Obama’s advisers have seized on the widely cited statistic that 15 percent of drivers are uninsured, even though insurance is legally required.
Bah. Neither Obama nor anyone else is claiming that mandates are not enforceable; they are noting quite pointedly that the level of compliance will depend in large part on the carrots and sticks associated with the mandate.
The carrot is insurance subsidies for folks who can demonstrate a low enough income. But Obama's issue is whether Hillary also has a big stick. Here is Krugman acknowledging that point the last time he assaulted this topic:
...Mr. Obama accuses his rivals of not explaining how they would enforce mandates, and suggests that the mandate would require some kind of nasty, punitive enforcement: “Their essential argument,” he says, “is the only way to get everybody covered is if the government forces you to buy health insurance. If you don’t buy it, then you’ll be penalized in some way.”
As an economist the notion that incentives and penalties will affect people's behavior should hardly surprise Krugman, but let me document it anyway by citing this study on "The Likely Efficacy Of Mandates For Health Insurance":
The effectiveness of a mandate depends critically on the cost of compliance, the penalties for noncompliance, and the timely enforcement of compliance.
Thank heaven for studies.
Lets swing back to Krugman:
Anyway, why talk about car insurance rather than looking at direct evidence on how health care mandates perform? Other countries — notably Switzerland and the Netherlands — already have such mandates. And guess what? They work.
Hooray for The Netherlands, and Switzerland too. But if we are looking at evidence, why doesn't Krugman present some evidence about the carrots and sticks on offer in the Netherlands. This tidbit from a health care oriented blog about which I know nothing may strike Hillary backers as a politically unpalatable penalty:
Individuals have a mandate to purchase coverage (effective 1/1/06) and pay a penalty of 130% of the monthly premium if they go without coverage.
A year after Massachusetts became the only state to require that individuals have health coverage, residents face deadlines to sign up or lose their personal tax exemption, worth $219 on next year’s state income tax returns.
That is roughly $20/month, which apparently is not providing a lot of motivation. However...
But in the second year, the fine can amount to half the cost of the least expensive policy available, probably at least $1,000.
Higher penalties produce higher compliance - go figure.
And I know we are all curious about Switzerland but so far all I have found is this:
For those who try to evade the mandate, penalties are stiff: the government can tack on fines equally 30 percent to 50 percent of the price of the insurance. Misrepresenting whether you are covered is punishable by fines and prison terms.
If I had to guess I would bet that the 30% to 50% is in addition to the cost of the insurance. Or could it be the case that if a person not in compliance is detected they are fined but allowed to walk away without paying their way into compliance? I don't know.
So to recap - everyone except Krugman acknowledges that higher penalties produce higher compliance; Hillary does not want to hint at the penalties she has in mind because they are likely to draw unfriendly fire; and Barack does not think Hilary should be allowed to claim her plan is "universal" unless she is willing to take the heat for the compliance components that will make it universal.
Back to Krugman's false talking points:
The second false claim is that people won’t be able to afford the insurance they’re required to have — a claim usually supported with data about how expensive insurance is. But all the Democratic plans include subsidies to lower-income families to help them pay for insurance, plus a promise to increase the subsidies if they prove insufficient.
Oh, stop - unless the insurance is free there will be people who will only be buying insurance because they are forced to, not because they want to or because they think that the subsidized price is right. Krugman and Clinton, in their wisdom as the economy's central planners, are comfortable asserting that these people can "afford" it but what does that mean? There are plenty of things people can "afford" if jail is the alternative.
And whatever the level of subsidization, there will be some groups - most likely the working near-poor and the middle class - that think the insurance is not affordable relative to the alternatives, one of which would be more heavily subsidized insurance. Of course, this is not a bug but a feature - Hillary and Bill made it clear in 1993 that their goal was use health care to create a huge new middle-class entitlement, thereby positioning the Democratic Party as the purveyor and protector of these middle-class benefits in the same way that (back in the day) the Democratic Party wooed the elderly by being generous with Social Security. Any day now!