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Removing The Individual Mandate Would Reduce The CBO Score

I’ve spent all year immersed in health care policy. It is unfortunate to see some of my arguments criticized based on a complete lack of understanding of the subject matter. Nate Silver attacked my suggestion of removing the individual mandate because he claimed it would increase the CBO score:

Why? Because such a bill, with good reason, will be scored terribly by the CBO. You would definitely have very high premiums and would probably have a bill that was no longer deficit-neutral (the government is on the hook for some of those higher premiums to the extent that it’s paying subsidies). Is Ben Nelson going to vote for a bill with a $1.1 trillion price tag that raises premiums by 30 percent?

This is just wrong (I disagree with Gruber’s exact numbers, but not the general trend). The individual mandate is only a way to force the young and healthy to buy insurance, and make them subsidize older Americans. (Since the young people will also be subsidized by the government, it is, in fact, a way for the government to indirectly subsidize health insurance for older Americans twice.) This is how it helps keep average premiums down on the exchange. But the individual mandate does not reduce overall health care spending, use of health care services, or cost to the government. Removing the individual mandate would have the net effect of reducing the CBO score not increasing it.

The individual mandate would also not change the amount the vast majority of Americans will personally pay for their health insurance on the individual market because of how the tax credits are structured. It does not get us, as a country, to real universal health insurance. If the goal is to get as many people “into the system” as possible, policy people should be pushing as hard for a real employer mandate as they are for the individual mandate (something I have not seen). Because it will be illegal for undocumented immigrants to buy insurance on the new exchange, their only real hope of getting insurance is through their employer. The CBO says the Senate bill will reduce the number of low income people getting employer-provided insurance in this country by 5 million. The House bill, with a real employer mandate, increases number of people with employer-provided insurance by 6 million.

Finally, Sliver’s health care continuum shows a lack of detailed understanding of the subject. He ranks the Wyden-Bennett bill on par with single payer. This is simply a conclusion I don’t think can be reached looking at the facts available. (It is arguable that the Dutch or German health care system might be on par with single payer, but Wyden-Bennett lacks many of the critical cost control mechanisms found in those systems.)

Ignoring that most of Wyden-Bennett supposed “savings” come from failing to properly index the subsidies, its basic goal is to put every American on the FEHB exchange of private insurance plans. The problem is that the FEHB and private insurance companies are a proven failure at reducing cost. Health care costs on the FEHB have grown at the same rate as the rest of the market. On the other hand, it cost roughly 25% less to insure someone with Medicare than with private insurance. Wyden-Bennett might result in a minor reduction in health care spending. Medicare-for-all would cut our health care spending by roughly 20%, and do a better job of slowing our health care growth rates. There is no comparison.

If Silver thinks Wyden-Bennett is as good as single payer, it is no wonder he tries to diminish the importance of the public option. I think a public option is critical because all the data indicates public insurance has done a dramatically better job at controlling health care costs than private insurance. I think his continuum is all wrong. The reform bill with a truly robust public option (Medicare buy in) would rank dramatically above Wyden-Bennett. A Medicare buy-in that would be around 11-25% cheaper than private insurance companies. It would have a much better chance of reducing health care spending than any system of private insurances exchanges that lack a central provider reimbursement negotiator.

I also understand people think any expansion of coverage is a step forward, but it is only a step forward if it proves popular. If this health care expansion proves too expensive and unpopular, it can serve to discredit progressive efforts to later reform. I would happily work for a smaller house with a truly strong foundation. I don’t think a bill that enriches, empowers, and entrenches the enemies of reform is a good foundation.

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Jon Walker

Jon Walker

Jonathan Walker grew up in New Jersey. He graduated from Wesleyan University in 2006. He is an expert on politics, health care and drug policy. He is also the author of After Legalization and Cobalt Slave, and a Futurist writer at