On the Individual Mandate

Here’s a piece from 2007 discussing the importance of the individual mandate to the health reform law in Massachusetts that served as a model for national reform.

You can read the entire analysis of the Massachusetts law. Below is the excerpt on the mandate:

Personal Responsibility. A final prototype issue is the contentious one of the Massachusetts individ­ual mandate or similar “personal responsibility” provisions.[10] Clearly, as long as there is a federal mandate on hospitals to treat patients regardless of ability to pay, there will be an incentive for some to forgo purchasing health insurance and, if they need care, to try to stick others with the bill. Insurance reforms and premium support can never complete­ly counter that incentive. Thus, state governments will inevitably have to consider some mechanism for enforcing personal responsibility if they are to escape would-be “free-riders” imposing not only their direct costs, but also the bigger, indirect costs-such as the cost of propping up uncompeti­tive providers-on the rest of us.

Here, too, the Massachusetts experience is instructive. Governor Romney did not propose a health insurance mandate.[11] What he proposed was that those who still insisted on going without cover­age in a reformed system demonstrate proof of their willingness and ability to pay their own bills by posting a bond or establishing an escrow account. The Massachusetts legislature replaced those provi­sions with a requirement that individuals buy health insurance or be fined-essentially an indi­vidual “play or pay” requirement.[12]

I contend that the governor had the better idea, on both philosophical and economic grounds. Oth­er states will likely improve on the Massachusetts prototype by developing still different approaches. However, regardless of the specific mechanisms and their relative merits, the larger issue is important. Put simply, one cannot expect the system to work well if individuals are allowed to privatize the bene­fits of their actions and socialize the costs.

The person praising the Massachusetts law and the individual mandate is Edmund Haislmaier from The Heritage Foundation, a conservative think tank. He makes no mention of the individual mandate being unconstitutional.