The Agenda

Tyler Cowen on a Defensible Insurance Mandate Flip-Flop

I enjoyed Tyler’s post, partly because I have personally flip-flopped on the individual mandate.

My problem with the mandate is a bit different, however: it comes down to transparency. It is one thing to create an on-balance-sheet public program that offers insurance subsidies to people who buy coverage at actuarial value X (say a catastrophic policy tied to income, per the Feldstein approach) and allows them to top off to buy better coverage, etc. At a sufficiently high level of subsidy, this could markedly reduce loading without a mandate. This is a nice and transparent approach. I see the mandate as an instrument to create an off-balance-sheet tax, which I consider ill-advised. 

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