The Democratic Party needs to be saved from itself, or at least from its tendency to retreat into the gauzy nostalgia of the past. It’s understandable, here in the hourly news deluge of President Donald Trump’s chaos realm, to pine for the relatively comforting quietude of the Obama presidency—a placidity that owed much of its calm to the fact that we weren’t confronted as often by news of the icebox detention centers, medical debt lawsuits, and inexcusable foreign policy decisions that routinely dodged the coverage, and the shame, that was deserved. Ah, but what if we could return to a bygone era of laughter and forgetting about politics?
Only this impulse can explain one of the most awful, but least covered, policy promises made in this presidential primary. In July, Joe Biden said on CNN that he would bring back the Affordable Care Act’s (ACA) individual mandate. The scant coverage that Biden’s plan received failed to spark much of a broader conversation, despite the fact that there’s been a near constant demand placed on Medicare for All proponents to show how that plan would be financed. This is madness. The individual mandate was terrible policy and worse politics, and Biden has only set himself up for the kind of attack ads that supposedly make Medicare for All too risky to contemplate. It is, perhaps, no surprise that a party so steadfastly committed to not admitting its mistakes would toy with such a dangerous notion.
It’s a trip to read anything that was written about health care policy prior to 2015. In the era before Bernie Sanders mainstreamed single-payer and President Donald Trump came close to repealing the Affordable Care Act, it was taken as a given by the pundit class that the only way to provide health care coverage was through a private insurance marketplace augmented by a few public programs. The only real question was how to set up this arrangement in an optimal way. With this mindset, during and after the passage of the Affordable Care Act, wonks made the straight-faced argument that the uninsured were “gaming” the system to get free medical care. In order for private insurance to thrive—and apparently everyone agreed that this was a top policy goal—someone had to deal with that group of stubborn bastards presumed to be gleefully risking financial ruin or death out of the desire to not spend money on private health insurance. That situation called for the individual mandate.
A 2013 letter signed by 30 economists in defense of the Affordable Care Act’s individual mandate argued that without the mandate, “some people will choose to gamble or to free-ride, undermining the fairness and financial stability of the health insurance system.” These were 2013’s good guys, remember, espousing the progressive position. Apparently, economists aren’t required to learn what actually happens in the real world to uninsured people who make use of health care—for example, being sued into bankruptcy or jailed. A survey of women with breast cancer found that 77 percent of uninsured patients had been referred to bill collectors. The same survey found 98 percent of uninsured patients had delayed care because of cost, implying that they had not got the message about the apparent availability of free care. Some free ride. Another case of terminal Wonk Brain.
A 2010 post at the Center for American Progress by Jonathan Gruber, one of the architects of the ACA, warned grimly that “[u]ninsured individuals impose major costs on the rest of society.” It’s true that uncompensated care is a problem for hospitals and the taxpayer—it’s a driving factor in the closure of rural hospitals, for example—but the piece places the fault squarely on those individuals who made the naughty decision to not buy insurance, as opposed to policymakers who had failed—in a way unique to most developing nations—to provide adequate health care for all. This was a very conservative view to be appearing under the banner of “progress.” It’s no wonder that the individual mandate had been favored by conservatives, and was part of Mitt Romney’s health care reforms in Massachusetts, before President Obama co-opted it.
Nevertheless, the individual mandate was “absolutely necessary” to Obama’s health care reform, wrote Vox’s Sarah Kliff in 2015, because it encouraged “people unlikely to buy a plan—mostly healthy people who think premiums are a waste of money” to do so. The theory was that it would strengthen the ACA’s risk pool by ensuring that there would be a surfeit of healthy people, who didn’t use much care, to subsidize the premiums of sicker people in the pool who posed higher costs to the participating insurance companies. This would allow those companies to keep premiums low; without it, premiums would be too high.
But, as Vox’s Dylan Scott wrote in 2018, it “didn’t really work.” Six million people chose to pay the penalty instead of getting health insurance. Whoops! Scott suggested that “maybe the subsidies (the carrot) weren’t generous enough, maybe the penalty (the stick) wasn’t harsh enough.” Either way, the math didn’t add up. Let’s say you’re single, an Alabama resident, and make $36,000 a year. According to the Kaiser Family Foundation’s penalty calculator, your penalty for not buying coverage would be about $695 under the individual mandate. But the cheapest health care plan would be $1,794 per year, after subsidies, and likely has high deductibles that make it unusable. You don’t have to be an economist to figure out that most people would rather pay the smaller penalty instead of shelling out for the high-priced inferior product.
The big reason the individual mandate didn’t work, however, is that the Affordable Care Act and its supporters either didn’t realize or refused to acknowledge that the underlying cause of widespread uninsurance wasn’t some abundant population of carefree, healthy twentysomethings who’d rather vape than go to the doctor, and don’t see the value of health insurance. (Have you ever met someone who doesn’t want to be insured?) Rather, those who lacked insurance couldn’t afford it, and still couldn’t even after the ACA passed.
The mandate theory only works if this population of people who could afford insurance but chose not to, due to free-riding or laziness or whatever else, was real and significant, and therefore could be forced into making the payment it was their civic duty to make. As it turns out, this was not the case, and the fact that the available subsidies weren’t good enough to defray the cost of the ACA’s premiums didn’t help. (A benchmark silver plan in Alabama costs $525 before tax credits this year; a 40 year-old nonsmoker making $30,000 would still pay $206 a month.) Fewer people than expected ended up using the ACA exchanges than predicted, too.
The Supreme Court’s decision to allow states to choose not to expand Medicaid, and the subsequent decision by 14 states to take the court up on that offer, had a dramatic effect as well. There are millions who ought to be eligible for Medicaid but aren’t because they live in red states run by hooting psychopaths. In more than a dozen states, an individual cannot get health insurance even if their income is $0, if they don’t qualify for Medicaid in other ways. These factors brutally hobbled the ACA.
But the fact remains that premiums did not increase wildly over the past decade just because Medicaid wasn’t sopping up the poor and sick everywhere. Premiums for employer-sponsored insurance have skyrocketed too, because the often-absurd prices charged by hospitals keep rising. Moreover, the subsidies were never generous enough; in 2018, people wrote to me telling me their ACA plans cost $450 a month for a plan with a $6,000 deductible, or $324 a month for catastrophic (read: awful) coverage. And while the ACA improved health insurance drastically by mandating essential benefits and coverage for preexisting conditions, higher deductibles, narrow networks, surprise bills, and escalating drug costs make insurance a bad deal a lot of the time.
As it turns out, the ACA wasn’t so much able to wring more “affordability” out of the health care status quo as it was dependent on insurance being affordable in the first place. Still, the law’s definition of “affordable” was also absurd. Customers on the ACA exchanges did not have to pay the mandate if their insurance cost more than eight percent of their income. For some reason, the wonks have decided that eight percent is the standard for affordability—it’s also the maximum percent of income that the public option could cost under Medicare for America, and Joe Biden would limit premiums to 8.5 percent on the ACA marketplace.
Eight percent of one’s income is still a lot of money. A person earning $60,000 would have to spend more than $400 a month on healthcare before the law conceded that their insurance wasn’t affordable. Is $399 affordable, after rent, student loan payments, car payments, and food? And this is before you shell out for deductibles, co-pays, and drugs. For some people, that might be affordable; for many others, it would be out of the question.
The mandate, in other words, was a story of wonk hubris. For the big brains behind the ACA, it was obvious that we had to force the unruly American public—privately deemed “stupid” by Gruber—into purchasing insurance as a civic duty, and that insurance could be made affordable for all by marketplace design. Only this delusion can explain the remarkable confidence, the blasé self-righteousness, of 30 liberal economists claiming that the ACA simply “requires people to buy health insurance when they can afford to do so”—because the law’s determination of who could afford to do so was undoubtedly right—too correct to double check.
These policy problems are pivotal to understanding why the mandate was so politically toxic. The fact that the vast majority of political opposition to the mandate came from Republicans trained progressives to defend it, despite it being terrible policy and awful politics. It’s true that those Republican politicians who whipped up fury against it deployed a stupid and corrupt logic, but it hardly helped that arguing for the mandate with a straight face required one to gloss over the fact that the insurance on offer was both lacking and expensive. In 2016, the only part of the law that didn’t get more than 60 percent support in a Kaiser Family Foundation poll was the individual mandate, scoring just 35 percent approval. Who would have thought that requiring people in the midst of all manner of post-recession struggles to pay for a product that offered little and cost a lot would be such a political loser?
Yet Joe Biden, whose meandering campaign is premised on the notion that only he has the political power to defeat Trump, has said he would bring back the individual mandate. When asked by CNN if he thought that would be popular, Biden said, “now it would be, compared to what’s being offered.” The notion that the Trump era has made the prospect of paying top dollar for an inferior product somehow more alluring invites skepticism. The subsidies Biden might offer could be superior to the Affordable Care Act, but there’s little likelihood that they will engender universal satisfaction. There will remain people whose lives are more expensive than his clever calculated subsidies could have predicted, who find insurance unaffordable, and yet who are faced with a penalty for this crime. It’s also possible that Biden might decide that the solution is to increase the individual mandate’s penalty, costing people who’ve not earned any additional hardship more of their savings or leaving them little choice but to buy a threadbare, high-deductible plan.
Don’t expect other Democrats to ask Joe Biden why he is so bent on bringing the individual mandate back. It would be a tough sell for candidates who have attacked Biden for using Republican talking points against Medicare for All to turn around and deploy a talking point that Republicans used, even if it is correct, in a primary in which everyone is wooing voters who retain a significant amount of affection for Barack Obama and the Affordable Care Act. But someone should ask Joe Biden how he’d structure the individual mandate, how he would ensure it wouldn’t hurt people who really couldn’t afford insurance, and why he thinks it’s right to punish people for not purchasing a product from one of the least-trusted industries in America. Someone should snap Biden, and the party that has made him frontrunner, out of this madness.