Good News on Health Reform: The Massachusetts Individual Mandate Does Not Appear to Be Melting Down...
The Republican Party Has Always Been at War with Eurasia

RomneyCare Reduces Uncertainty

David Leonhardt:

David Leonhardt: On the most basic level, the law will ensure that people can get health insurance, and thus medical care, even if they are not insured by their employer or their spouse’s employer. Today, many can’t. The people who try to buy policies in the individual market are disproportionately those who have reason to think they or their children will need medical care. Healthy people, on the other hand, often go without coverage — until they think they need it. So insurance companies charge sky-high prices for individual policies, to cover the high average costs of care. The new law takes two steps to solve the problem. First, it prohibits insurers from denying coverage or charging more because of a person’s health. Second, the law requires individuals to have insurance, spreading the costs of care among the sick and the healthy....

[T]he law is quite moderate. It is more conservative than President Bill Clinton’s 1993 plan or President Richard Nixon’s 1974 plan (in which the federal government would have covered anyone who wasn’t insured through an employer). It’s much more conservative than expanding Medicare to cover everyone. It is clearly one of the least radical ways for the United States to end its status as the only rich country with millions and millions of uninsured. But the law depends to a significant degree on the mandate. Without it, some healthy people will wait to buy coverage until they get sick — which, of course, is not an insurance system at all. It’s free-riding.

Without the mandate, the cost of insurance in the individual market would rise, perhaps sharply, because some healthy people would not be paying their share. Just look at Massachusetts. In 1996, it barred insurers from setting rates based on a person’s health but did not mandate that individuals sign up for insurance. Premiums then spiked. Since the state added a mandate in 2006, more people have signed up, and premiums have dropped an average of 40 percent.

It’s easy to look at the current debate and see an unavoidable trade-off between this country’s two economic traditions — risk-taking and security. But I don’t think that’s quite right. I think it is ultimately as misplaced as those worries about Social Security and Medicare equaling Bolshevism.

Guaranteeing people a decent retirement and decent health care does more than smooth out the rough edges of capitalism. Those guarantees give people the freedom to take risks. If you know that professional failure won’t leave you penniless and won’t prevent your child from receiving needed medical care, you can leave the comfort of a large corporation and take a chance on your own idea. You can take a shot at becoming the next great American entrepreneur.

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