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In this brief we conclude that, absent a single payer system, it is not possible to achieve universal coverage without an individual mandate. The evidence is strong that voluntary measures alone would leave large numbers of people uninsured. Voluntary measures would tend to enroll disproportionate numbers of individuals with higher cost health problems, creating high premiums and instability in the insurance pools in which they are enrolled, unless further significant government subsidization is provided. The government would also have difficulty redirecting current spending on the uninsured to offset some of the cost associated with a new program without universal coverage.
Our contention that an individual mandate is critical to achieving universal coverage rests upon three points. First, many individuals will not choose to obtain coverage under a purely voluntary system. Second, adverse selection will occur under a voluntary insurance system.Third, it is politically difficult to redirect current government spending on care for the uninsured to offset the costs associated with new broad-based reforms unless the full population is insured.
Evidence on Voluntary Participation. There is abundant evidence that without an individual mandate a health reform would fall well short of achieving universal coverage.As part of the work that we did early in the debate over universal coverage in Massachusetts,we showed that voluntary approaches without an employer or individual mandate would only cover about 40 percent of the uninsured; adding an employer mandate would still leave about 50 percent of the uninsured without coverage. We found that Massachusetts could achieve universal coverage only with an individual mandate, even when we assumed relatively generous subsidies provided to those with incomes up to 400 percent of the FPL, government-sponsored reinsurance for high-cost cases in the private nongroup and small-group (fewer than 100 workers) markets, and an organized purchasing pool.
Other analysts have reached similar conclusions. In a study that analyzed health reform options for the state of New York, the Lewin Group found that voluntary measures including a public expansion and subsidized buy-in to a state health plan reduced the number of uninsured by 29 percent.Adding an employer mandate (but not an individual mandate) to these voluntary measures reduced the number of uninsured by 36 percent. In an analysis extending the Massachusetts type plan to the United States, Jon Gruber found that voluntary measures, including income-related subsidies and a purchasing arrangement, would reduce the number of uninsured by about 50 percent.
Opponents of an individual mandate argue that they can come close to universal coverage with a combination of income-related subsidies, more options for purchasing affordable coverage (e.g., through purchasing pools), and administrative mechanisms for facilitating enrollment in insurance. The most recent data indicate that there are 47 million uninsured people in the United States. Even if subsidies, benefits, and administrative simplifications are sufficient to reach two-thirds of the uninsured (a reach beyond what any study to date has shown for a voluntary system), this would still leave 15.5 million people uninsured.This would be admirable, but would be considerably less than full coverage, and, as health care costs and insurance premiums increase, these numbers could easily erode unless further government dollars were injected into the system.
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