Will People Follow a Health Care Mandate?

Washington Post: Several Factors Determine Whether or Not People Would Follow Government Order to Get Health Insurance

(Washington Post)  This story was written by Alec MacGillis.

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People are more likely to buckle their seat belt than follow the speed limit, even though the penalties for speeding are higher. They are more likely to go along with hotel efforts to reduce linen laundry if told that other guests are doing the same.

And the question of whether people will follow a government order that they carry health insurance -- an issue that will help determine whether universal health care is a success or costly failure -- will depend on more than the penalty they would pay for refusing, many economists say. This, they say, is the lesson of behavioral economics, a school of thought that holds that people do not necessarily make decisions out of well-reasoned self-interest. It is an approach that has gained a powerful foothold in the Obama White House.

"We're human. And there are lots of other influences that go into what we do," said Kenneth Baer, a spokesman for the Office of Management and Budget. "One of the most important insights of behavioral economics is that we're not all rational maximizers calculating our cost and benefits and doing things like a computer."

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As the proposed $900 billion health-care legislation inches toward the finish line, a critical unknown is whether people would comply with a mandate on individuals to carry insurance, one of the Democrats' primary tools to significantly increase the number of Americans who have coverage. The Senate Finance Committee, whose bill has dominated much of the recent debate, set its maximum penalty for noncompliance at $750 per year, at the same time creating subsidies to help low-income Americans buy coverage. In the House, the penalty is based on income, but works out to about the same for a middle-class family.

But many reform supporters say the finance panel's subsidies are too low. And insurers are pushing for larger penalties. If younger, healthier people pay the penalties instead of buying coverage, they warn, it will upset the legislation's balance, resulting in higher premiums for less-healthy people or bigger costs to the government.

That calculation is more complex when seen through the prism of behavioral economics, a hybrid of economics and psychology that has been ascendant for years, never more so than today, with many of its leading practitioners in the White House.

As the behavioral economists see it, compliance will depend not only on the penalties and cost of coverage, but also on the ease of signing up for coverage and whether people can be persuaded that it is a widely accepted social norm. They point to the large number of eligible people who fail to take advantage of Medicaid, food stamps and Pell grants as a sign that perceived inconvenience can keep people from taking steps in their economic interest. By contrast, the Medicare drug benefit program has achieved high enrollment partly because low-income Medicare recipients did not need to apply for subsidies if they already qualified for Medicaid.

"Non-financial things matter. . . . When the choice itself is complicated, it can deter people from making choices," said William J. Congdon of the Brookings Institution. "The small hassles associated with taking up programs -- driving to an office, filling out a form -- have a disproportionate effect in discouraging people."

The record of mandates is mixed, according to research done by Sherry Glied, a Columbia University professor of health policy who has been nominated for a position in the administration. The rates of people buying car insurance, for example, vary among states and do not correlate directly with the size of penalties for going without insurance. Overall, she found, mandates work best when compliance is relatively easy and affordable, when penalties are "stiff but not excessive," and when enforcement is prompt and routine.

The thinking is that people tend to settle for the default option -- in the most oft-cited example, people are far more likely to participate in a 401(k) savings plan at work if they are automatically enrolled in it, with the choice of opting out. OMB Director Peter Orszag has done research on that point, and Cass R. Sunstein, the director of the White House Office of Information and Regulatory Affairs, featured it in "Nudge," the 2008 popularization of behavioral theory that he co-authored.

Some experts argue against setting up an equivalent default enrollment for health insurance, since it would require spending money and choosing an insurer. But others, including one of the behavioral economists hired by Orszag, Harvard University's Sendhil Mullainathan, have argued for using the tax system to collect automatic payments for health premiums.

The best case study is Massachusetts, which instituted a health insurance mandate three years ago that has succeeded in bringing coverage levels from 91 percent of state residents to more than 97 percent. The state made it easy to sign up -- people who qualified for subsidized coverage got help filling out forms at safety-net hospitals and clinics, while others could use a Web site to determine whether they qualified for subsidies or call a new agency, the Health Connector, for assistance.

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The mandate had bipartisan backing, and residents were deluged with publicity. The Boston Red Sox promoted the mandate, pharmacy loudspeakers intoned it, grocery store receipts carried reminders and churches coaxed congregants. The Health Connector held 200 meetings with employers and two dozen outreach sessions, community groups received funding to help people sign up, and residents got red-lettered postcards in the mail.

And it worked: A Health Connector board member told Glied that a typical comment from young adults coming to sign up for coverage was: "My mom said I had to sign up for health insurance or I would get into trouble."

Mark B. McClellan, who oversaw Medicare and Medicaid under President George W. Bush, said his promotion of the Medicare drug benefit succeeded for the same reasons, by penetrating people's lives with trusted voices. McClellan spent much of 2005 on a bus between enrollment events where "neutral people" would talk up the benefit.

"People would stand up and say, 'This was not necessarily the bill we wanted, but here are the facts and for most of you it's in your best interest,' " he said.

Health Connector Executive Director Jon Kingsdale cautioned that the cost of coverage and penalties still play a big role, and said he worries that the federal bills fall short. While the Massachusetts penalty started at $219, it kicked in right away and ticked upward a year later, to what is now roughly a $1,000 maximum, enforced through the state income-tax system. The Senate Finance Committee legislation's penalty, on the other hand, kicks in a year after the bill goes into effect; it wouldn't reach $750 until 2017.

Given the outlines of the emerging bills, Richard Zeckhauser, a Harvard economist who has worked with many of the White House economists, says he is unconvinced that it will be in the interests of many young people to comply. And he questions whether the government should use behavioral economics to persuade them otherwise.

"We can think of ways of mesmerizing them into buying things they shouldn't buy, but I don't think government can be in that role," he said.

[Adamgv9701]

This mandate screws the middle/lower middle class and the young and healthy. Many individuals will earn too much to qualify for subsidies but too little to afford the monthly premiums. It screws the young and healthy who will be forced to pay a wildly disproportionate share of the costs into the pool for services they will likely never use. And with the ratio between what an old person and a young person pays being restricted, young people's premiums will skyrocket. I will opt out and pay the fine. If the fine is too high, I will be forced to purchase an overly bloated insurance policy. If that happens, I will make it my goal to utilize as many healthcare resources as I possibly can even if not medically necessary. I refuse to throw money away on a monthly basis and get nothing in return.

[babooph]

With the new salaries few can pay the crooks off=after the execs skim their wad-=stock holders grab theirs -lobbyists pay the bribes,little is left for the customer-what fool would pay for this scam from an 8$/hr slave wage?

[imalexdude]

There is no way I will follow a law requiring me to pay for something I don't even want. This legislation is lunacy and being pushed hard by lobbyists. It will have absolutely no benifit to the public, only ensure the large insurance corporations get richer. I will not comply. I will not pay any fines. I will not re-elect any politician that supported this legislation. I will encourage anyone who currently has health insurance to drop their coverage if this legislation is passed and completely boycott these crooked bastards until the law is reversed.

[Void_Master]

I foresee the mandate as a failed effort. I do believe Congress will pass some kind of mandate in whatever comes out of Washington under the guise of health care reform. I also know of at least two different groups who are already getting the "ducks in a row" toward the end of challenging the constitutionality of any such mandate; pretty much as soon as it passes.

Then there are those like myself, who: 1)will not get insurance regardless what the government says; 2) will not go to the local welfare office to apply for health care like it was food stands, and; 3) will not pay a fine even if it means not submitting a tax return.

I'm already in the habit of not making my assets available to the outside world. Anyone (IRS included) who went after my bank account stands a good chance of collecting somewhere between $1 and $10. My income does not come from a (payroll) paycheck nor any other source that can be levied, liened or garnished.

Now that's just me. Most people out there are not that well protected. But then I observed many years ago that *I* (and not big brother) was responsible for my own protection -- and I began acting on that then.

Finally what about the vast majority of the homeless? How will a mandate be enforced upon them? I won't be; thus opening the door for yet more constitutional challenge (think "equal protection under the law").

[CommentMaker]

Not willingly!! Politicians only know how to "spend" money. Our health and insurance systems were set-up as profit makers. Putting it in the hands of politicians to organize and implement it is insanity. There needs to be a committee set-up to completely review the system and present it to the public for a vote. Nothing good comes from people with political agendas - NOTHING!

[sjc_1]

The government will eliminate the abuses done by the insurance companies. The government will also provide insurance for those that do not now have insurance. Mandating that people must go to the evil greed mongers will only backfire without a public option and anyone with any sense at all knows this.

[jsd330]

Younger single people could care less about health insurance. Do you think they are going to worry about a mandate or a fine? I have a 25 year old single nephew, who say's he's healthy and doesn't need or want insurance. He even opted out of his employer insurance, because he didn't want to pay the $100 dollars a month.

[jtdev1]

Forget Mandates, Options, Etc...

We need UNIVERSAL health care...

Ok, What happens if we have a "Mandate", and "Options" and still we're going to have job losses and who pays the insurance bill then?

You ever see the cost of Cobra? There is no way I could begin to pay those costs when there is no money coming in.

UNIVERSAL HEALTHCARE is the only way to go.

Some people say it would be too costly, but if you really looked at what your Private Insurance cost you would see it is a lot cheaper.

Heck, for my family of 4 I'm paying over 15K for UHC insurance and still pay over 4K of a deductable a year not to mention copayments.

I'd rather pay the Government and never see a single bill from going to the hospital.

[MaxiMai53]

Amen to that~!

[sjc_1]

A mandate with no option will just anger lots of people and could change the outcomes of some elections. This is JUST what the wrong wing wants and will allow the opposition to shoot themselves in the foot and then the wrong wing will benefit from people's misery once again. Don't make this mistake, pass the Public Option now and save yourselves LOTS of trouble in the future.

[stn_sage]

YOU are exactly correct about this...in my opinion!

PLUS, a lot of people are going to look at this and think, what RIGHT do shiftless, corrupt, greedy politicians in 'D.C.' have...to tell 'ME' what PERSONAL health care choices I HAVE TO make?!

And, that's a good question and a strong argument!

So, IF they do it, they better provide for a full public option...and do it right...because if they don't...it WILL be perceived as NOTHING MORE than an attempt at FORCIBLY acquiring tens of millions of insurees...and PROFITS...for the insurance industry!

THIS, combined with Congresses poor performance over the last NINE years...having refused to deal with some pressing issues and botching others...hardly suggests that they are CAPABLE of generating anything other than DISASTER!