Peter Suderman at Reason says that “the major provisions of ObamaCare have already been tried. And they don’t look good.” New York combined guaranteed issue and community rating in 1993, and destroyed the individual insurance market.
New York’s reforms haven’t worked out very well, according to a 2009 Manhattan Institute study by Stephen T. Parente, a professor of finance at the University of Minnesota, and Tarren Bragdon, CEO of the Maine Heritage Policy Center. In 1994 just under 752,000 individuals were enrolled in individual insurance plans, about 4.7 percent of the nonelderly population. This put New York roughly in line with the rest of the U.S. Today that figure has dropped to just 0.2 percent. By contrast, between 1994 and 2007 the total number of people insured in the individual market across the U.S. rose from 4.5 percent to 5.5 percent.
The decline in the number of people enrolled in individual insurance plans, the authors say, is “attributable largely to a steep increase in premiums” because of the state’s regulations. Parente and Bragdon estimate that repealing guaranteed issue and community rating could reduce the price of individual coverage by 42 percent.
This is something for progressive opponents of the individual mandate to bear in mind. You need the mandate to counter the adverse selection which gave those results.
Suderman, an opponent of the proposed national reform, points out that Massachusetts, which has a mandate, has seen premiums rise too. In this post, he doesn’t go into whether the cost-control experiments that the Senate bill proposes, and which Massachusetts didn’t try, are likely to work. CBO notwithstanding, I’m betting that healthcare reform along Senate lines will indeed raise premiums and the budget deficit–but will also point up methods for bending the curve with subsequent initiatives and maybe further legislation. Right now, I believe, that’s the best that can be done–and good enough. But the individual mandate needs to be watched: dropping it, or riddling it with loopholes, really does threaten the whole enterprise.