Dr. Krugman v. Dr. Obama

Paul Krugman just published his most critical piece yet of Senator Obama and his health plan. Those who read this blog know that I think Krugman is a thoughtful political and economic analyst, but I have to wonder if he's missing a few critical points this time. One focus of the piece is Senator Obama's favorable portrayal of his own health plan's lack of an individual mandate for adults. I think a mandate makes a lot of sense, but that Obama's position is not unreasonable for an advocate of universal health care. Further, Obama's overall rhetoric around his lack of a mandate does not necessarily play into conservative hands as neatly as Krugman argues.

First, Krugman does not address the cost issue raised in an earlier post in this blog. This is a critical point. Even if, Senator Edwards, whose plan includes a mandate, proposes to automatically enroll non-enrolled folks who file taxes, that policy will not only continue to disproportionately leave out lower-income folks--many of whom do not file taxes, but it does not itself ensure an adequate subsidy for these folks. Affordability concerns are particularly salient under an individual mandate as the LA Times recently highlighted with regard to California and the Progressive States Network recently highlighted with regard to the Massachusetts individual mandate. (This doesn't mean that the Edwards automatic enrollment proposal isn't a good idea.)

Second, as Krugman recently noted--although not very favorably--the highly respected health care economist David Cutler and others have produced estimates suggesting "that a combination of subsidies and outreach can get all but a tiny fraction of the population insured without a mandate."

Third, is Senator Obama really "giving aid and comfort to the enemies of reform"? The words seem unduly harsh at best and there is certainly something to be said for Senator Obama's framing of the mandate issue as one of affordability. Senator Obama says that "the reason people don’t have health insurance isn’t because they don’t want it, it’s because they can’t afford it," which is mostly true now, but Krugman thinks this will be less true under Obama's plan. It's unclear why though. Of course some healthy folks will take the chance of remaining uninsured and their eventual medical care will end up costing the insured, but these folks are likely talking a chance primarily due to a lack of knowledge about enrollment or a decision that the plans are not worth their price. But that first issue is addressed through outreach and the second through subsidies and other mechanisms to make health plans more affordable. No less (and possibly more) than Senator Clinton or Senator Edwards's plan, Senator Obama's plan seems to do both. More importantly, Senator Obama's framing of health care enrollment as primarily an issue of affordability rather than choice for example--in part embodied by his lack of a mandate--might actually promote universal access by couching health care coverage as a need and desire among all Americans, largely limited by affordability rather than individual preference, as some conservatives argue.

Further, the lack of a mandate could boost support for subsidies to lower-income folks. One can imagine a situation 4 years from now, under any of the frontrunners plans, where we learn that some percentage of low-income folks aren't enrolled in plans. With a mandate, a debate on increasing access might be more likely to focus on increasing penalties for non-enrollment. Without a mandate, that same debate might focus more on increasing subsidies. Obama is emphasizing the carrot over the stick.

Importantly, Obama's decision not to have a mandate probably does not hinge so much, as Krugman argues, on the notion that Obama "doesn't want the government to “force” people to have insurance, to “penalize” people who don’t participate." More likely, the Senator doesn't want the government to force lower-income people to pay for insurance or penalize people who don't participate.

The point here is not to argue that individual mandates are bad (I think they may well be the right way to go.), but rather to say that Krugman and others might be misunderstanding the motives behind Obama's proposal and that Obama's proposal is quite reasonable.

Whenever I can find them, I'll post contrary opinions, and here's one from Ezra Klein. While there are other important points to make, I'll leave that to commenters. Oh, and here's a great piece from The Onion about universal health care.

[In the interest of full disclosure: I have contributed to Senator Barack Obama's campaign.]

UPDATE: Here is a great--if now old--explanation from Matthew Yglesias of the purpose of mandates (adverse selection and free-riding) and why maybe only massive government intervention can truly make health coverage universal. Len Nichols has a very different idea of the potential effectiveness of mandates. And while Ezra Klein lays out the argument that Obama's plan's lack of a mandate suggests a "lack of audacity," while Mark Schmitt makes the point, easily missed in Paul Krugman's columns, that objections to mandates have most often come from the left.