Coverage v. Coercion

Suppose you were choosing between two employers. Both offer the same Blue Cross insurance to employees who pay 25% of premiums. But one employer says, "Choose us. We provide more universal coverage because we make our employees take the insurance even when they don't think it is worth the 25% contribution." Does this argument sound persuasive? Sure doesn't to me. I'd say both firms are offering the same coverage, with one adding a heaping dosage of coercion that doesn't really sweeten the deal.

Yet Hillary Clinton is basically making the argument of the coercing employer. There is no serious claim that the Clinton plan would offer cheaper health care coverage than the Obama Plan. They both subsidize premiums for lower income persons, and the Obama plan, if anything, does more to lower premiums because it adds an innovative reinsurance plan that lowers insurer costs and invests more in information technology to lower medical costs. But Clinton keeps arguing her plan offers more universal coverage because of one thing: she adds a mandate that forces people to take the insurance even if they would rather not.

Now a national health care plan does have plausible reasons to include mandates. But the case for mandates has nothing to do with solicitude for those who cannot afford health insurance. It instead has to do with a very debatable policy question about whether free riding problems merit coercing citizens to force them to pay their fair share.

The free rider problem is this. Hospitals cannot legally deny people emergency care. Thus people who do not buy insurance can go to emergency rooms for care even when they cannot afford it. This might induce them not to buy insurance in the first place.

But it is quite unclear how large this free rider problem is. After all, it is not as if hospitals do not bill the uninsured for their emergency care. If they pay those bills, there is no free rider problem. And if they cannot pay the bills, they usually could not have afforded insurance either.

One also wonders how many people who could afford health insurance really are tempted to forgo it for the limited care provided by emergency rooms. After all, emergency rooms need only provide care to people with real emergency conditions, and even then need only stabilize those patients. They also make patients wait for hours, and often try to avoid treating nonpaying patients. Not surprisingly, the empirical evidence is mixed on whether a free rider problem exists at all.

In any event, this free rider problem would at most justify mandating the purchase of insurance covering emergency care, and cannot explain mandating full insurance coverage.

Nor is it clear how effective mandates would be at curbing any free rider problem. The Clinton campaign keeps saying their plan would insure 15 million persons left uninsured by the Obama plan. But this argument has two doubtful premises. First, it assumes their mandate would be 100% effective. Massachusetts has a health insurance mandate, and so far the evidence is that 20% of uninsured don't comply, which given 45 million uninsured would mean the Clinton plan would also leave 9 million uninsured, and thus able to free ride if we think that is going on. Second, the 15 million figure is quite debatable, and the Obama campaign presents reasonable data to say that only 2 million would fail to accept coverage under their plan.

But the debate about whether the correct number is 2 or 15 million misses the real point. If Clinton campaign is right that 15 million would reject health care coverage without a mandate, then she is effectively claiming that 1/3 of the uninsured would conclude they are worse off under her plan. I'm not sure why this should count as a point in its favor.

The bottom line is this. If you are worried about paying for your own health care coverage, there is no reason to favor the Clinton Plan over the Obama Plan, and the latter is probably a bit better. If your concern is other people not paying for emergency care, then the Clinton plan is more responsive. But it isn't clear whether that concern is significant or how effective mandates are solving it, and in any event a mandate covering all health care would be an overboard solution.

Einer Elhauge is Petrie Professor of Law at Harvard Law School, Director of the Petrie-Flom Center for Health Law Policy, Biotechnology, and Bioethics, and an unpaid member of an Obama Health Care Advisory Committee. This op-ed does not purport to reflect the views of the Obama campaign.