Running for cover

Will mandating the purchase of health insurance lead to universal coverage?

THE biggest domestic-policy difference between Hillary Clinton and Barack Obama almost certainly concerns health care. Mrs Clinton proposes individual mandates, which would require people to buy health insurance. To help the poor afford it , she promises subsidies from the government.

Boosters of the individual-mandate approach, with which Massachusetts is now experimenting, hope that it would lower average costs by forcing the many young and healthy people now currently without coverage to buy a health plan. As Mrs Clinton pointed out this week, such people do get health care, but in the most expensive way—by turning up at emergency rooms uninsured.

Mr Obama also insists he wants universal health coverage, but would require only some people to buy it: parents, who would face a mandate to purchase insurance for their children. Instead of requiring everyone to buy insurance, he hopes to reduce its cost so that people would buy it voluntarily. He argues that Mrs Clinton has not properly accounted for the cost of the subsidies needed to help the poor, and suggests that the many exemptions from the mandate likely to be given to the indigent would undermine her claim of universal coverage.

Who is right? It is too early to say for sure, but the experience so far in Massachusetts suggests that Mr Obama may be closer to the mark. The state's individual mandate has become law, but perhaps a fifth of its uninsured are likely to get a hardship waiver. The state has set up an insurance clearing-house with subsidised products in the hope of reining in health-cost inflation, but costs look set to soar again this year.

Look beyond Massachusetts to California, where the uninsured make up a bigger share of the population, and the theoretical advantages of an insurance mandate meet the hard realities of tight budgets. The staggering cost to the state was a big reason that Arnold Schwarzenegger's ambitious plan to extend universal health coverage with help from a mandate recently collapsed.

Mrs Clinton argued this week that the federal government “had more resources” than states had to finance her proposed shift to universal coverage. Maybe not, if a report issued by the official Centres for Medicare and Medicaid on February 25th is to be believed. The government's actuaries calculate that even without any new universal-care scheme, spending on health care in America will reach nearly 20% of GDP by 2017, up from about 16% last year, with Medicare spending nearly doubling over that period.
The Economist Feb 28th 2008