For the last three years, domestic politics in the US has centered around the concept and application of mandates in health care. Barack Obama made that the key to his health-care reform; the Tea Party got fueled in large part over its inclusion. Obama argued at the time and to this day that his mandate originated among Republicans, and in the current presidential nomination race in the GOP, the question of which candidate supported a mandate and when. The origin of the debate on the Right is a Heritage proposal during the early 1990s intended as an alternative to the so-called HillaryCare proposal.
Now one of the scholars central to Heritage’s mandate, Stuart Butler, writes in USA Today that not all mandates were created equal, and that the mandate in ObamaCare is much different than what they conceived (via Matt Lewis):
[T]he version of the health insurance mandate Heritage and I supported in the 1990s had three critical features. First, it was not primarily intended to push people to obtain protection for their own good, but to protect others. Like auto damage liability insurance required in most states, our requirement focused on “catastrophic” costs — so hospitals and taxpayers would not have to foot the bill for the expensive illness or accident of someone who did not buy insurance.
Second, we sought to induce people to buy coverage primarily through the carrot of a generous health credit or voucher, financed in part by a fundamental reform of the tax treatment of health coverage, rather than by a stick.
And third, in the legislation we helped craft that ultimately became a preferred alternative to ClintonCare, the “mandate” was actually the loss of certain tax breaks for those not choosing to buy coverage, not a legal requirement.
So why the change in this position in the past 20 years?
First, health research and advances in economic analysis have convinced people like me that an insurance mandate isn’t needed to achieve stable, near-universal coverage. For example, the new field of behavioral economics taught me that default auto-enrollment in insurance can lead many people to buy coverage without a requirement.
Also, advances in “risk adjustment” tools are improving the stability of voluntary insurance. And Heritage-funded research on federal employees’ coverage — which has no mandate — caused me to conclude we had made a mistake in the 1990s. That’s why we believe that President Obama and others are dead wrong about the need for a mandate.
Additionally, the meaning of the individual mandate we are said to have “invented” has changed over time. Today it means the government makes people buy comprehensive benefits for their own good, rather than our original emphasis on protecting society from the heavy medical costs of free riders.
One can see why Republican politicians at the time, working off of Butler’s concepts, publicly supported the notion of mandated hospitalization coverage ( or “catastrophic”), even if as Butler admits it still wouldn’t pass constitutional muster. It also explains why someone like Newt Gingrich would link that to taking out a bond as an alternative. It’s the car-insurance model, where states require either coverage for liability or a bond large enough to cover the damage done to others on the roads.
That doesn’t explain everything for Republicans, though. Romney’s health-care reform in Massachusetts didn’t limit the mandate to just hospitalization. Gingrich continued public support for a mandate into 2010 even after it became clear that the context was not just free riders but a mandate for comprehensive insurance, and on a federal rather than state level (although Gingrich at least admits now that he was wrong). That’s an important point; the car-insurance model has two distinct differences. First, it’s imposed on a state level, a difference Romney repeatedly asserts, but second, it applied explicitly to the use of public facilities. States have the prerogative to set conditions on the use of public roads, such as licensing, safety equipment, and insurance protection for damage done to others, even if one thinks some of those laws are either ill-advised or unnecessarily intrusive. ObamaCare is neither limited to state action or public facilities, but mandates that each adult buy insurance of very specific types (approved within “exchanges”) regardless of its application to the use of public facilities.
Butler admits that his conception of a mandate doesn’t meet constitutional muster. However, it actually provides the direction that real health-care reform should take. We need to get rid of third-party payers for most routine health care and get people to move to “catastrophic” coverage instead, which is what insurance has always meant. The use of health-savings accounts, catastrophic insurance, and an emphasis on price transparency will bring discipline to health-care decisions without government interference and allow for much wider access to insurance based on risk of catastrophe rather than routine visits and tests.