Wednesday, February 9, 2011

Individual Mandate Alternatives

Paper from Jon Gruber, the MIT Economist who was an adviser to Mitt Romney in Massachusetts has a paper on the relative merits of risk pooling mechanisms that are replacements to an individual mandate via Austin Frakt.

Most interestingly to me is his estimate (which does have lots of assumptions, especially since lots of auto-enroll examples are not health insurance) that auto-enroll procedures such as those envisioned by the Patients' Choice Act cost about the same amount with only two-thirds as much coverage because they default people into the low cost government option. I have always wondered why the Patients' Choice Act was never scored by CBO, and this may be why. A staffer for one of the sponsors told me they couldn't get it scored because CBO was so busy, but the PCA was introduced in May 2009 before the flurry of bills began coming out of House Committeess. Here is an old post linking to some discussion of private scoring that was done by S. Parente at Univ. of Minnesota. Just for kicks, I wish someone would reintroduce the PCA and have it scored by CBO.

Gruber's conclusion about making projections of coverage options is worth highlighting:

"Modeling the impact of fundamental health reform is a balancing act between leaning on what is known and modeling what we need to know. In the case of the new health reform law, that balancing act was greatly assisted by the experience of Massachusetts, which provides a great case study of the world with reformed insurance markets and an individual mandate. Once we move away from the individual mandate, our estimates become considerably more uncertain."

We have better evidence on how an individual mandate works than we do for alternatives.

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