Framing The Health Care Picture

RJ Eskow

June 19, 2007

RJ Eskow is a writer who maintains The Sentinel Effect and is a frequent contributor to progressive sites, such as The Huffington Post.

The health reform debate has divided Democrats and confused the public. Plans have been offered by Presidential candidates, several states, and Sen. Ron Wyden. The success or failure of these plans, and perhaps of the Democratic Party, may eventually hinge on the public’s reaction to one issue: mandates that require individuals and/or employers to buy health insurance. 

Mandates are a popular idea because they seem to offer a fast track to universal coverage. Even the Wyden plan, which eliminates employers from health purchasing, extracts an employer tax and retains an individual mandate. The only plans without mandates are single-payer proposals and “consumer-driven” Republican plans, and so far the latter have been little more than smokescreens for reducing employee benefits. In fact, Barack Obama offered the first major plan that initially foregoes individual mandates, except for children, while retaining them for employers.  

What’s the problem with mandates? First, there are practical implications. If not properly designed they can endanger a plan from the start. The Massachusetts plan, for example, failed to effectively weigh the true cost of coverage against the tax penalties. After the plan was introduced it became clear that forcing individuals and small businesses to pay the cost of full health coverage was politically untenable.

The state lowered its sights. It delayed the requirement that plans include drug coverage and approved plans that include significant out-of pocket copays and deductibles. Some have a payout limit of $50,000 or $100,000 per year. As a result, many state residents will still face the risk of ruinous medical costs. That’s hardly “universal coverage.”

Massachusetts employers (of 10 employees or more) face a light penalty of $295 per employee if they don’t provide insurance. That’s insignificant compared to premium costs, so many employers will pay the penalty instead. By contrast, their employees and other uncovered individuals face the loss of personal tax exemptions in 2007, which could cost them $3600, followed in subsequent years by a penalty of half the expected premium. 

Despite the state’s retreat on plan design, Massachusetts residents still face a harsh reality as the July 1 enrollment deadline approaches. The Worcester Telegram (MA) asks:

Will a 55-year-old person living on $32,000 a year be able to pay $276 every month for the cheapest plan available under the new program ... or $320 per month or more in following years ..?

The Massachusetts experience highlights some of the pitfalls with mandates. One is definitional: Is coverage really “universal” if medical expenses are still potentially ruinous or premiums are unaffordable? Another is structural: If penalties cost less than the actual premiums, all that’s been created is a new regressive tax on some middle class households.

Other plans will no doubt learn from the Massachusetts experience and impose more realistic penalties on employers. An unintended effect of this may be to create a boon for large employer, most of whom provide coverage already. If reform lowers premiums as promised, larger companies will see their costs drop while smaller companies assume a new expense. None of the reform plans I’ve seen have reviewed the potential impact this might have on the overall economy. 

Politically, the net impact of employer mandates could be to drive small employers toward Republicans. And individual mandates could represent a propaganda field day for the Right. Imagine Fox News trumpeting language like this (taken from Ron Wyden’s website):

Every time an individual interacts with state, local and federal government—registering their car, enrolling their children in school, applying for a driver’s license or paying their taxes—they can be required to verify their enrollment in a private health insurance plan.

That can be made to sound Draconian without too much effort.

When Edwards criticized Obama for failing to provide universal coverage in his plan, Obama used auto insurance figures to argue that mandates don’t guarantee universal compliance. That’s true, but the larger issue is this: If mandates are an essential component of universal coverage, what’s the best way to design them?

Edwards performed the deft move of appearing to attack Obama from both the left and right simultaneously. He struck a populist note by demanding immediate universal coverage (which Obama’s plan addresses in later years). And he has struck from the right by using the concept “shared responsibility” for health coverage. 

I differ with Jacob Hacker, who argued that the absence of individual mandates was a weakness in the Obama plan. I think that’s a “feature, not a bug.” Premiums must be made affordable to middle-class families before the government demands their purchase. If financial burdens aren’t made more income-sensitive they may become a form of regressive taxation. 

As for “shared responsibility,” it’s a conservative construct that’s out of place in this context. When Americans don’t purchase health insurance they can’t afford it’s not “irresponsible.” It’s a tragedy. The “shared responsibility” lingo will never be enough to blunt conservative opposition to health reform, but it may divide and alienate the Democratic base.

The next several months will be crucial in framing the debate. Democrats have come up with complex programs but haven’t found a “hook” for presenting them. If they don’t soon, their opposition undoubtedly will, and mandates may fit the bill. 

So how can Democrats win, rather than lose, on this issue? First, study the numbers carefully before providing more specifics. Their plans’ ability to succeed will depend in large part on the balance between affordability and penalties. They should modify the small-employer mandate by developing a sliding-scale system that’s fair to new and struggling enterprises. 

Individual mandates should be deferred until costs come down. If and when mandates are implemented they should be designed and presented as something that will save people money while protecting their well-being.  They should include more sensitivity to household income. And when they’re introduced, it should be without the scolding and atonal language of “shared responsibility.”

More broadly, Dems should frame their proposals as innovations—New Deals for health that ensure Americans are never again driven into financial ruin by medical bills. That’s a claim that the Massachusetts plan, for one, can’t make. 

Republicans will be looking for a “soft” issue to attack Democrats in 2008, and they may find it in mandates.  Democrats should carefully consider the mandate issue, with special attention to matters of fairness and effective design. They should then move aggressively to frame the debate in the coming months. If they don’t, they run the risk of having it framed for them in ways that will hinder both their electoral chances and the opportunity for real reform.