Myth of the Massachusetts Mandate

Remember the Massachusetts health reform, signed by Gov. Mitt Romney in April 2006? Some Obamacare cheerleaders (including the President) insist that it was the forerunner of Obamacare (and Gov. Romney is having a heck of a time distancing himself from it).

There is a media myth that the individual mandate (that you must pay a fine if you don't buy government-approved health insurance) is critical to the law's so-called "success".  Well, it's not true.

The New York Times' David Leonhardt asserts that:

...the law depends to a significant degree on the mandate. Without it, some healthy people will wait to buy coverage until they get sick — which, of course, is not an insurance system at all. It’s free-riding. Just look at Massachusetts. In 1996, it barred insurers from setting rates based on a person’s health but did not mandate that individuals sign up for insurance. Premiums then spiked. Since the state added a mandate in 2006, more people have signed up, and premiums have dropped an average of 40 percent.

Whoa, whoa, whoa.  The mandate is a myth because it is (reasonably) not enforced on most of the uninsured. According Massachusetts’ 2008 report on the uninsured only 17% of the 150,000 residents who reported being uninsured for all of the year were assessed a penalty. Only 35% of the 71,000 who were uninsured part of the year were assessed a penalty. That’s 50,350 people in 6.5 million: Less than one percent of the population.

It is politically and economically ridiculous to think that the government can assess a financial penalty on people who cannot reasonably afford overpriced health insurance.

Many of these folks pay nothing towards their coverage under the reform. According to the Commonwealth Connector’s latest report (p. 8 ), 42% of Commonwealth Care beneficiaries pay zero share of their premiums. This is a one third increase (from 31%) since 2009.

Can anyone credibly argue that this is significantly different from a Medicaid expansion? The Massachusetts health reform was little more than a huge growth of subsidies, entailing a significant increase in political control of people’s access to medical care.

(Read more commentary on Mr. Leonhardt's article here.)