James Oliphant writes in the Chicago Tribune that the mandate is being opposed by many progressives as well as most conservatives. The article does a good job of presenting both sides of this argument. Here’s part of the pro-mandate argument:

The justification for the mandate seems simple: It reflects the basic concept underlying all insurance. A large number of people pay relatively modest premiums, creating a pool of money big enough to take care of those who need help. Having people of all ages participate is especially important with health care, analysts note, because the medical problems that result in big claims are found disproportionately in middle-aged and older Americans.

If younger, healthier people go without insurance, premiums for the others would be driven higher.

The objection is that, especially without the public option, people are going to be forced to purchase increasingly unaffordable insurance and thereby enrich the insurance industry.

To which the pro-mandate side might respond that insurance is becoming increasingly unaffordable as it is, and those who go without insurance not only put themselves at terrible health and financial risk, they are also driving up the cost for everyone else, because health care bills that are paid get jacked up to pay for people who can’t pay.

As it is, there is some incentive for young and healthy people to get insured, because once they have a pre-existing condition they may not be able to purchase insurance. However, under the current bill, beginning in 2014 insurance companies will no longer be allowed to refuse to take a customer because of his pre-existing conditions. This would make it a lot easier to just put off getting health insurance until one begins to need health care beyond an annual flu shot.

But that would be a disaster for the people who are paying for insurance, because if younger, healthier people are not paying into the risk pool, there are more claims against fewer dollars. And the cost of insurance goes up.

There is a real concern that people are going to be required to buy policies they cannot afford. However,

Under the Senate bill, all a person would have to do is pay $750 per year or 2 percent of household income, whichever is greater, in order to avoid the mandate. The House penalty is slightly higher. (This difference will be worked out in negotiations this month.) …

… Linda Blumberg of the Urban Institute says much of the public’s resistance stems from still-sketchy details about how the new insurance exchanges that would likely be established for those without job-related coverage would operate. People who earn just over 100 percent above the federal poverty line would become eligible for Medicaid — and those up to 400 percent would qualify for federal subsidies.

I would like to see Medicaid expanded even more, and I would like to see more subsidies, and that may be something we should work on. But killing the mandate is un-progressive, IMO. And yes, with single payer this wouldn’t be an issue. And if I had the money I’d move to a penthouse on Park Avenue.

See also Nate Silver.

To get an idea why health care costs are insane, check out this article from the Sarasota, Florida, Herald Tribune. A boy banged his head on a bookcase during a pillow fight. The scalp laceration wouldn’t stop bleeding, so his mother took him to a hospital emergency room. A doctor took a quick look at the boy’s scalp and closed the superficial wound with one small staple.

“The doctor came in for all of five seconds, said he needed a staple, and then told us to go to a pediatrician to take it out,” Tobio said. “We saw the doctor for three minutes total.”

The bill: $1,654.

The boy’s mother wanted to know how one staple cost $1,654, so a reporter, Anna Scott, contacted the hospital to find out. It turns out the staple itself, the staple gun used to apply it, a bandage, and a topical anesthetic cost $274. The gun holds 35 staples, but it can be used only once even if only one staple is used. Then it is thrown away to avoid spreading infection. Whatever happened to sutures?

Note this part:

The staple is helping pay for about $60 million the hospital loses every year from people who are uninsured or cannot pay for treatment, said the hospital’s chief financial officer, David Sullivan.

When the hospital staff says the staple costs $274, they are accounting for the fact that they only receive, on average, 30 cents for every dollar they charge. That includes deals brokered with private insurance companies, too, deals current health care bills do not propose regulating directly.

I keep harping on this, but it’s obvious to me that — within the confines of the current health care reform bills — getting costs hauled back into Reality Land requires getting as many people insured as possible. I fully appreciate that paying for insurance can be a real hardship. I’ve been there. But what’s happening is that people who aren’t insured are running up bills that are being paid by people who are insured, which is one reason why insurance costs so much. Getting more people insured — especially more younger and healthier people — should help. That’s why I support mandates.

The doctor’s charge to do the stapling was $951: $480 for the visit and $471 to repair what the bill calls “a superficial wound.” … Because hospital doctors are usually private contractors, the hospital does not control what they charge.

Now, I suspect the doctor has to jack up his charge for the same reason the hospital does — he doesn’t always get paid for what he does. But I’ve read in several articles that hospitals that pay physicians a fixed salary do a lot better job of keeping cost down, at no loss of quality. However, I suspect that’s the sort of thing we probably can’t do much about until we get closer to a single payer system.

After a few seconds of medical care, the boy’s mother spent about an hour filling out forms. A recent PriceWaterhouse study found that $210 billion is wasted each year on medical paperwork, mostly having to do with insurance. I believe there’s a provision for uniform insurance forms in the House and Senate bills.

In the case at hand, apparently when the boy smacked his head his pediatrician’s office was closed, so the mother took him to an emergency room. That’s what uninsured people do, of course, which is the most gawd-awful cost-inefficient way to provide health care possible, because emergency rooms have horrifically high overhead. A system of neighborhood walk-in clinics for non-critical medical problems would provide care at a lot lower cost.

For his vote on the Senate bill, Sen. Bernie Sanders got an increase of $10 billion in funding for nonprofit community clinics to provide basic health care and pharmacy services, billing on a sliding scale. For this, lots of progressives blew up in outrage and threatened to campaign against him in the future.

And that’s the story of the $1,654 staple.

However much I respect wonkiness, I lack the math skills to be a wonk myself. Especially when numbers (including money) are involved, I must trust the wonks to know what they’re talking about. I can’t present arguments of my own beyond “what Bob the Wonk said.” So, when I run into opposing arguments from people I respect that involve numbers I don’t always know who’s right.

In yesterday’s Washington Post, an MIT economics professor named Jonathan Gruber presented an enthusiastic endorsement of the excise tax on “Cadillac’ health insurance policies. Gruber calls it “an innovative way of financing the health reform we so desperately need.” On the other hand, in today’s New York Times, Bob Herbert says the tax “will hammer millions of middle-class policyholders, forcing them to scale back their access to medical care.”

So who’s right? Hell if I know. Maybe they both are — the excise tax is a means of financing health reform that will impact many middle-class policyholders. Or not. Hard to say. Note that Ezra Klein is less enthusiastic about the tax than Mr. Gruber but less alarmed than Mr. Herbert. Exactly how the tax would impact individuals depends on a lot of other factors, apparently.

A “Cadillac” policy according to the Senate bill is a policy whose costs exceed $23,000 annually for family coverage and $8,500 for individuals. The excise tax would be a tax paid by the insurance companies on the amounts over those thresholds. In other words, if a family policy costs $24,000 a year, the tax would be levied on $1,000. This tax would impact all qualifying policies; the income of the policy holder is irrelevant.

However, no one seems to know exactly how many of these “Cadillac” policy holders are out there. The average costs of family and individual policies are lower. For example, the average cost of an employee-benefit family policy in 2009 is $13,375, according to the Kaiser Family Foundation. So who would be impacted? Right now, I don’t know. If health care costs continue to rise as fast as they have in recent years, eventually it would suck in just about everybody, however.

Non-group individual HMO policies, by which I mean policies that are not in a group plan, here in New York are a lot more expensive than $8,500 a year, and I assume the excise tax would apply to those also. One of the frustrations of trying to purchase individual plans here is that the companies don’t give you choices — here’s our HMO plan at $900/month, take it or leave it. A plan with lower premiums but, say, higher co-pays might be welcomed by some people, and the excise tax would force Empire Blue Cross to come up with such a policy.

But, ultimately, the success or failure of the entire health reform process depends on getting costs under control. Various provisions in the bills — such as the dreaded mandates — are there to reduce cost, and if they work the “Cadillac” plan provision possibly won’t be that big a deal to that many people. If they don’t, then yeah, I can see how the excise tax could result in a bite.

For that reason, it seems to me to be a bit deceptive to take one part of the reform plan and examine it outside the context of the rest of the plan. Bob Herbert’s arguments are compelling, but they seem to assume that nothing else about our health care “system” will change. For that reason, I’m not sure he’s right. Maybe he is, but not necessarily.

According David Leonhardt at the Times, a study by the Center on Budget and Policy Priorities, “a liberal research group,” endorsed the plan and said liberals should like it. Another endorsement from the wonks. On the other hand, Dartmouth economics professor Andrew Samwick says,

I am not a fan of the excise tax on so-called “Cadillac” health plans. I would need to be convinced that the reason why the premiums are so high is unrelated to the health characteristics of the insured group. What if the premiums are so high because the insured group is old or has large families? Simply including all plans in the ex post risk adjustment and reinsurance aspects of the bill is the right way to even out premium costs in the face of differences in the insured group. And if people want to spend more on their own health insurance, through high-quality services or (to my thinking) inefficiently low deductibles and co-pays, why stop them?

Well, as I said above, in some situations the insurance companies aren’t providing a lower-quality, lower-cost choice. But the larger point is that on this bit of the Senate bill, reasonable people disagree.

Update: Ezra Klein responds to Bob Herbert.