[December 19, 2007 @ 7:56 pm] David Catron

Harvard economist Greg Mankiw offers some useful observations on the zealotry with which ”progressive”  health care wonks push insurance mandates:

Some analysts, when discussing health reform plans, make a big deal over the issue of insurance mandates. They suggest that it is crucial to have mandates to solve the adverse selection problem and that plans without mandates will not work.

But Mankiw, like Barack Obama, is not convinced that mandate proponents are prepared to impose the kind of penalties required to make a mandate stick:

A mandate is only as effective as the penalty backing it up. No one, as far as I know, is ready to make failure to be insured a criminal act punishable by jail time. Instead, if a person fails to follow the mandate, he merely pays a penalty.

Thus, the the kind of mandate favored by Hillary Clinton, John Edwards, et al isn’t really a mandate at all:

The mandate is really just a financial incentive to have insurance … The only real issue is the size of the incentive.

Mankiw goes on to point out that a $1,000 fine for not having insurance is no different than a $1,000 tax credit for having coverage:

The difference is purely semantic. In both cases, a person faces $1000 incentive to have health insurance … It does not matter whether we describe that incentive as a carrot [the tax credit] or a stick [the fine].

It is instructive to note which politicians emphasize the carrot and which emphasize the stick

One comment

  1. Brian Schwartz Says:

    I have noticed this too, that is, the apparent equivalence between mandated insurance (w/ a tax penalty for not complying) and tax credits for buying insurance. Yet, what happens to people who does peacefully refuses to cooperate with this policy — by not paying the tax penalty? They ultimately end up in jail, right? So “the failure to be insured [is then] a criminal act punishable by jail time.”

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