Heritage is not to blame

In the course of a Facebook snit with a bunch of Freedom-Haters, I came across this Stuart Butler column in USA  Today:

The confusion arises from the fact that 20 years ago, I held the view that as a technical matter, some form of requirement to purchase insurance was needed in a near-universal insurance market to avoid massive instability through "adverse selection" (insurers avoiding bad risks and healthy people declining coverage). At that time, President Clinton was proposing a universal health care plan, and Heritage and I devised a viable alternative.

My view was shared at the time by many conservative experts, including American Enterprise Institute (AEI) scholars, as well as most non-conservative analysts. Even libertarian-conservative icon Milton Friedman, in a 1991 Wall Street Journal article, advocated replacing Medicare and Medicaid "with a requirement that everyU.S. family unit have a major medical insurance policy."

My idea was hardly new. Heritage did not invent the individual mandate.

But the version of the health insurance mandate Heritage and I supported in the 1990s had three critical features. First, it was not primarily intended to push people to obtain protection for their own good, but to protect others. Like auto damage liability insurance required in most states, our requirement focused on "catastrophic" costs — so hospitals and taxpayers would not have to foot the bill for the expensive illness or accident of someone who did not buy insurance.

Second, we sought to induce people to buy coverage primarily through the carrot of a generous health credit or voucher, financed in part by a fundamental reform of the tax treatment of health coverage, rather than by a stick.

And third, in the legislation we helped craft that ultimately became a preferred alternative to ClintonCare, the "mandate" was actually the loss of certain tax breaks for those not choosing to buy coverage, not a legal requirement.

So why the change in this position in the past 20 years?

First, health research and advances in economic analysis have convinced people like me that an insurance mandate isn't needed to achieve stable, near-universal coverage. For example, the new field of behavioral economics taught me that default auto-enrollment in employer or nonemployer insurance plans can lead many people to buy coverage without a requirement.

Also, advances in "risk adjustment" tools are improving the stability of voluntary insurance. And Heritage-funded research on federal employees' coverage — which has no mandate — caused me to conclude we had made a mistake in the 1990s. That's why we believe that President Obama and others are dead wrong about the need for a mandate.

Additionally, the meaning of the individual mandate we are said to have "invented" has changed over time. Today it means the government makes people buy comprehensive benefits for their own good  rather than our original emphasis on protecting society from the heavy medical costs of free riders.