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Observation: The Overlooked Reversal: Obama’s Support for Requiring the Purchase of Health Insurance September 2009

The Overlooked Reversal:
Obama’s Support for Requiring the Purchase of Health Insurance

By Courtney Burke
Director, New York State Health Policy Research Center

Courtney Burke

One of the most important parts of President Obama’s Sept. 9 speech on health care reforms (which, if enacted, will affect many millions of Americans) was his clear support for the idea that everyone have health insurance, just as anyone who drives a car is required to have auto insurance.



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Courtney Burke serves as director of the Rockefeller Institute's New York State Health Policy Research Center (HPRC). Her research focuses primarily on topics related to Medicaid and the Children’s Health Insurance Program, including long-term care issues.

The president’s declaration in support of requiring individuals to purchase insurance is a reversal of the position he took during the presidential campaign, when he opposed such a measure. What made the president change his mind? It’s hard to know, but perhaps it is the experience of one state that has such a mandate — Massachusetts — and the less successful experiences of other states that tried to expand insurance coverage without a mandate.

The requirement to purchase health insurance in Massachusetts, sometimes referred to as “personal responsibility” or the “individual mandate,” allows exemptions for low-income people. The state also provides subsidies to help people afford to buy coverage.

As pointed out in a recent report from the Rockefeller Institute, requiring people to have health insurance would impact many more individuals than other controversial proposals, such as a public insurance plan option, but it also may be one of the most effective means for covering more uninsured. This is because a requirement that individuals purchase health insurance prevents healthier people from choosing not to buy insurance. By bringing these healthier and, typically, less expensive customers into the pool of insured, average premium costs are lowered. To use the language of health-policy wonks, adverse selection — the problem created when the people who have health insurance also incur higher-than-average medical costs — is avoided.

Massachusetts has experienced relative success with covering many of the uninsured with its health insurance reforms. The estimated number of uninsured is somewhere in the range of 2 percent to 3 percent of the population. That proportion is down significantly from 10.3 percent in 2004-2005 — and much lower than the estimated 15 percent of persons uninsured nationally. The individual mandate is largely credited with being a critical reason for the decline in the number of Massachusetts’ uninsured.

States have tried many other measures to decrease the number of uninsured. Examples include pooling people with pre-existing medical conditions or chronic diseases separately from other parts of the population, or providing insurance for insurance companies (known as reinsurance) to help them lower premium costs. But state experience to date shows that none of these measures has proven as effective at lowering the number of uninsured as a requirement that everyone have insurance. High-risk pools, for instance, are operated in 34 states and although they may benefit those enrolled in the pools, they generally have not dramatically reduced the total number of uninsured.

The insurance industry, which would likely gain millions of new customers from the individual and employer mandates the president supports, earlier this year endorsed the idea that individuals be required to purchase insurance. The industry is one of the influential interest groups whose voice will be heard in Congress, and its stance on the issue may have contributed to the president’s change in position on this issue. But states’ experiences also likely changed a mind or two about the role of personal responsibility in the health insurance debate.

It just so happens that one of the minds that was changed has a bully pulpit otherwise known as the Oval Office.


ABOUT THE ROCKEFELLER INSTITUTE OF GOVERNMENT

The Nelson A. Rockefeller Institute of Government, the public policy research arm of the State University of New York, conducts fiscal and programmatic research on American state and local governments. It works closely with federal, state, and local government agencies nationally and in New York, and draws on the State University’s rich intellectual resources and on networks of public policy academic experts throughout the country.