Mandate alternatives: How well can they work?

I’m moving this conversation from the comments of another post to here. To help me, I’ll quote Igor Volsky, who sums up pretty much everything I could say about alternatives to the mandate (that is, not much). As always, if you’re aware of relevant studies, let me know.

Sen. Claire McCaskill (D-MO) is considering a plan that would create “an open-enrollment period for people who want to buy health insurance, and assess a penalty on anybody who tries to enter the insurance market after that window closes.” […]

In today’s political climate, this idea sounds better than the individual mandate — although that had bipartisan support as late as August 2009 — but what makes for good politics doesn’t translate into better policy. As far as I can tell, and from what health economists who study these things told me, giving individuals a defined period of time to purchase insurance would cover far fewer people than mandating it (that’s because lower participation would lead to higher premiums since healthy people would stay out of the risk pooil.) Or at least, that’s what economists say — nobody has really scored the alternatives. One big advantage with the mandate is that we have experience in Massachusetts where, because of that policy, 98 percent of Massachusetts residents now have health insurance.

One thing I can add is that the late-enrollment penalty model is what’s used for the Medicare prescription drug program. It works fine for that, but that’s a totally different product for a totally different population. I would not want to extrapolate.

Finally, what’s of utmost importance is how the insurance industry feels about this. They’re fine with the mandate, naturally. Will they accept an alternative if they don’t have to (i.e., if the mandate is not struck down as unconstitutional)? This is probably the most important question in terms of what can pass. Whether it is good policy is also important. But if it can’t pass, that’s kind of irrelevant.

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