Tuesday, January 25, 2011

What happens to health insurance reform without individual mandates?

Thoughtful piece by Chicago Booth's Richard Thaler in Sunday's NYT about what might happen to the health care bill if the portion mandating individuals and firms to buy health insurance were deemed unconstitutional.  Thaler, one of the world's leading behavioral economists, points out that there are other ways to strongly encourage people to buy health insurance that stop short of the mandate.  One would be to automatically enroll laid off employees into a state insurance exchange.  Another mechanism would be to lose some insurance rights (e.g., ability to buy insurance at subsidized rates from the government, lost coverage of pre-existing conditions) if they fail to stay continuously enrolled.  Finally, give states the right to opt out of the program -- but with the understanding they opt out of federal health dollars as well. 

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