commentary

(NYTimes.com)

September 9, 2009

Finally, Presidential Support for the Individual Mandate

by Elizabeth A. McGlynn

Tonight the president outlined what he wants Congress to include in a health reform bill. One of the policies on which both House and Senate agree is the so-called individual mandate: a requirement that everyone purchase or obtain health insurance. This is in the House tri-committee bill, the Senate HELP bill, and the proposal released by Senator Max Baucus.

Until tonight, however, it had not explicitly been part of the rhetoric of the president himself. The point could prove crucial. RAND's latest analysis of options for reducing the number of people who don't have health insurance shows that among all the options included in the bills above, the individual mandate would have the greatest impact on increasing insurance coverage. By itself, an individual mandate could increase the number of people with insurance by up to 34 million — a 75 percent reduction in the uninsured.

The president said tonight that "significant details remain to be worked out." Here is one: Penalties matter. Bigger penalties for not obtaining insurance are more effective than smaller penalties. Indeed, even without a subsidy, we estimate that as many as 21.5 million people would become newly insured (assuming a penalty of 80 percent of one's premium, or $4,800 for an average individual). With a 30 percent penalty and no subsidy, about half as many would be newly insured.

Here is another detail: Subsidies also matter. Providing subsidies to people who earn up to 400 percent of the federal poverty level (along with a penalty set at 50 percent of the premium) would increase the number of newly insured by 25 percent more than a plan that offered subsidies of only up to 200 percent of the poverty level. Subsidies (whether in the form of a tax credit or another mechanism) are what add to the federal cost of this option. The alternative is to increase eligibility for Medicaid — something the president did not mention tonight, but something that is more expensive on a per-person basis than subsidies.

The individual mandate has now been described by the president and the Congress as a matter of personal responsibility. What does that mean? About 44 percent of the uninsured already have an offer of coverage through either Medicaid or an employer (their own or their spouse's). Without a mandate, they will not budge. In short, an individual mandate could be the cornerstone of legislation aimed at seriously reducing the ranks of the uninsured.


Elizabeth McGlynn is associate director of health at the RAND Corp. Tonight the president outlined what he wants Congress to include in a health reform bill. One of the policies on which both House and Senate agree is the so-called individual mandate: a requirement that everyone purchase or obtain health insurance. This is in the House tri-committee bill, the Senate HELP bill, and the proposal released by Senator Max Baucus.

This op-ed was part of a NYTimes.com Prescriptions: Making Sense of the Health Care Debate post on "Reactions to the Speech: A Health Care Roundtable."

This commentary originally appeared on NYTimes.com on September 9, 2009. Commentary gives RAND researchers a platform to convey insights based on their professional expertise and often on their peer-reviewed research and analysis.