Road to Universal Coverage (Wall St. Journal)

[Guest guest]

COMMENTARY

The Road to Universal Coverage By ROBERT B. REICH

January 9, 2008; Page A15

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. 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.

Mr. Reich, professor of public policy at the University of California

at Berkeley and former U.S. Secretary of Labor under President

Clinton, is author of " Supercapitalism: The Transformation of

Business, Democracy, and Everyday Life " (Alfred A. Knopf, 2007).

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