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Howard Dean's Takedown of the Individual Mandate Won't Help Reform

Once again, former Vermont Gov. Howard Dean has tried to help the healthcare reform cause and has instead hurt it. In a Huffington Post essay, Dean suggests that reform advocates need not worry about the legal action of 20 states that seek to overturn the individual insurance mandate in the Affordable Care Act. Even if the Republicans behind the suit succeed in knocking down the individual mandate in court, Dean says, it's not necessary to achieve the key goals of the reform legislation.

Unfortunately, the good Dr. Dean, who's also the former chairman of the Democratic National Committee, is dead wrong. The requirement that all Americans buy health insurance is central to the effort to expand coverage and control soaring costs.

Dean's thesis is that, absent an insurance mandate, Vermont managed to expand coverage and to ban pre-existing condition exclusions without driving up premiums or driving most insurers out of the state. But the thesis is misleading and doesn't really apply to the national situation.

For starters, Dean points out that, with the help of a Medicaid waiver from the Clinton Administration in 1992, Vermont achieved near-universal coverage for children under 18 without a mandate. That's true. But then he compares the 3 percent of Vermont children whose parents choose not to insure them to the similar percentage of all Massachusetts residents who have not bought coverage, despite the state's insurance mandate. The latest Census Bureau data allow a fairer comparison of the real difference between the two states. They show that the percentage of all Vermont residents who lack health coverage today is 9.9 percent, compared to 4.4 percent for Massachusetts. Regardless of how many people buck the law in Massachusetts, it's clear that the mandate has had an impact.

Dean also boasts about how Vermont families making up to $65,000 have been able to buy into Medicaid "for a generation." I'll grant that Vermont has a relatively generous Medicaid program. But here's the fine print: That family income limit is only for kids. For pregnant women, the limit is 200 percent of the federal poverty level, or $44,000 a year. And for all other adults, the income limit is less than $11,000 a year.

Dean also argues that you don't need an individual mandate to abolish the pre-existing income exclusion, which is designed to prevent people from buying coverage only when they get sick. Vermont eliminated it, he notes, and insurers did not flee the state in droves or jack up rates to the sky. There are still "three or four" plans left for individuals, he says. Their rates are comparable to those in the rest of the Northeast and lower than those in Massachusetts, New York, and New Jersey.

Those three states, like Vermont, all require "guaranteed issue," which means that insurers must sell to anybody who wants to buy coverage. (Maine and Washington have similar regulations.) Perhaps because Vermont also strictly limits variations in the rates charged to different individuals, its insurance costs aren't as high as those in the other guaranteed-issue states. But in general, guaranteed issue has not been a success in the absence of an individual mandate, because those who choose to buy insurance tend to be sicker than the average. This drives up rates and discourages healthier people from purchasing coverage.

No state has ever achieved near-universal coverage without requiring everyone to buy insurance and beefing up Medicaid. If the individual mandate fails in the U.S. Supreme Court, healthcare reform is in a lot of trouble, and the Republicans know that. For Dean to suggest otherwise is to do a disservice to his party and the cause of reform that he has fought for so valiantly in the past.

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