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The Massachusetts Plan: Doing Just Fine

Via Cato at Liberty, the Boston Business Journal has an interesting piece noting that not all of the uninsured in Massachusetts have complied with the state's mandate to purchase health insurance. Cato's Michael Tanner takes it as an occasion for gloating: "How could anyone know that an individual mandate for health insurance would be unenforceable? Oh yeah, we told them."

This seems misguided on a few levels. First, the numbers actually strike me as fairly encouraging: more than 80 percent of Bay Staters who were uninsured before the law took effect now have insurance, and while the deadline to obtain insurance (or risk a fine) is technically tomorrow, it's effectively the end of the year, so that number will probably rise higher (and, keep in mind, this is before the penalty even kicks in, which could prod even more people to comply).

More importantly, though, the critique misses the point. It's wrongheaded to pronounce the Massachusetts plan a success or failure based on whether the mandate actually achieves 100 percent coverage. The far more important part of the plan were the subsidies it provided to the working-class uninsured to buy a policy they previously couldn't afford--subsidies that, as the Boston Business Journal notes, tens of thousands of people have taken advantage of. The goal of the mandate was primarily to broaden the state's risk pool by forcing more (relatively) young, healthy, and well-off people to join it, driving down the cost of insurance. Obviously, insofar as some people are still refusing to do that, it's too bad, but you don't need absolute full compliance in order for the scheme to be effective. The real concern would be if substantial numbers of people were flouting the mandate because health insurance remains genuinely unaffordable for them, even with the subsidies. But by all accounts this isn't the case; the people who haven't yet purchased insurance are those who could afford to do so, but choose not to. This isn't ideal, but it's not at all fair to conclude that somehow the Massachusetts plan isn't working. The bottom line is, it's the subsidies that matter most, not the mandate.

--Josh Patashnik