New York Times columnist Paul Krugman suggested in a Feb. 4 column that if Sen. Barack Obama gets the nomination, universal health care "just won't happen," and he's right. Considering both candidates sit squarely in the middle of political liberalism, health care is one of the few major policy differences between the two.
The central difference in this debate is the concept of mandating health insurance. Clinton affirms there should be a government mandate requiring all citizens to possess health insurance. In contrast, Obama supports various subsidies and government incentives to make health insurance more accessible to citizens without requiring them only to buy it for children.
The problem with a system where there is no government mandate is that citizens will only choose to purchase health insurance only once they discover a necessary medical expense that outweighs the cost of purchasing insurance. Once a citizen finds out that he or she is suffering from some disease that will cost tens of thousands to treat, that person may quickly opt into insurance. This process of adverse selection forces providers to dramatically increases the cost of premiums or else refuse coverage. Insurance, like Social Security, only works if people pay into the system even when they don't need it immediately. Given that both campaigns support policies that would prohibit insurance companies from refusing coverage to anyone seeking it, government regulation is necessary to make health care universal.
Obama takes the position that more of the uninsured should be covered at affordable rates, which puts him in an awkward position. He must argue that either Clinton's mandate will fail to achieve its outcome of ensuring coverage due to the non-compliance of citizens or that a variant of his plan will ensure enough people opt into it.
Statistics regarding mandatory drivers' insurance provide some indication of how people may behave in response to mandatory health insurance. According to a 2006 Insurance Research Council study, 14 percent of drivers nationwide are uninsured, and a 2003 study by the Robert Wood Johnson Foundation estimates that a voluntary approach would only cover 40 percent of the uninsured (this study focused Massachusetts in particular, but many states with higher uninsured rates, including Texas, may even see a bigger percentage). While it is possible that there would be some degree of non-compliance under a plan such as Clinton's, it is more plausible that a mandate with penalties and necessary subsidies would be more effective than Obama's proposal, which excludes mandates for adults.
But Obama would have to take strategies to ensure people opt into his plan, such as installing penalties, offering subsidies that make insurance more affordable or creating an administrative system that promotes insurance. The problem with installing penalties, however, is that it is basically the equivalent of having an effective mandate, a position he has openly criticized. In comparison, it would be incoherent for the state to penalize its citizens for speeding if there were no speed limit.
Krugman's column cites research by Jonathan Gruber, a leading health economist at MIT, that suggests approximately 23 million out of 47 million uninsured people (slightly less than half) would buy health insurance voluntarily. Under a mandated system with penalties, he says, 97 percent of uninsured people would purchase health insurance. Given these numbers, a health care policy similar to Obama's would cost $4,500 per person versus the estimated $2,732 per person cost under Clinton's plan. While these numbers are merely predictions, the relative success of previous government-mandated insurance means the burden of proof is on the Obama campaign to provide empirical evidence that its system will result in enough people enrolling in health insurance.
Perhaps Obama avoids the route of a mandate as a matter of prudence, considering Republicans would find this an infringement on personal liberty and free-market principles problematic. Obama argued at last Thursday's debate that Clinton's plan would hurt those who could not afford insurance by forcing them to purchase it. This argument fails, considering Clinton's plan offers subsidies similar to Obama's plan and also lowers the overall cost of healthcare for all. Regardless, the problem of adverse selection is unavoidable without a mandate of some sort. Given the empirically supported hypothesis that more people enroll with a mandate, Clinton has the more economically efficient plan. She has good reason to be upset by the Obama campaign's use of the word "universal," and mailings that claim her plan forces those who can't afford insurance to purchase it. Her plan makes insurance less expensive for all Americans and offers subsidies to those on the fringes. Clinton has courageously advocated for the superior plan.
Kim is an economics and philosophy senior.
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