Recently there has been significant public discussion concerning the two main mandates included in all the major health reform bills currently under development by Congress. Both the Individual Mandate and the Employer Mandate have drawn significant criticism from each side of the political spectrum. So, why are criticisms so prevalent? In this brief post I just wanted to review the significance of the Individual Mandate.

The Individual Mandate is based heavily on a similar provision in the Massachusetts’ statewide health reform initiatives that kicked off in 2006. The Individual Mandate is the legal requirement that all adult residents posses “minimal creditable coverage” that is deemed affordable to them at their income level. The current Federal proposals all effectively mirror this language fairly.

During the 2008 Democratic Primary Campaign then-Candidate Obama took strong opposition to including an Individual Mandate in his health reform plan: a fact that differentiated him from other candidates. So why has now-President Obama turned an about face on this issue? Since coming into office President Obama’s advisors have convinced him of the importance of an individual mandate as one of the few, realistic means of addressing the ever-accelerating national health care expenditures.

Currently the sheer fragmented nature of the national health insurance system is one of the primary drivers for unnecessary expense. We, as a nation, pay mind boggling amounts of money on health care due to a number of reasons including: 1) currently the healthiest and cheapest Americans are either uninsured or pocketed into specific insurance markets (mostly major employer plans) so the rest of us are stuck in insurance pools that include primarily the sickest elements; 2) uninsured individuals (either voluntarily or involuntarily) are relegated to using Emergency Rooms and Urgent Care providers for all of their health care needs; and 3) since the sickest of us are so subject to insurance pools deemed high-risk the insurance companies have an incentive to limit access to care by discouraging enrollment, cutting coverage when medical emergencies do arise (since they are so incredibly expensive), and denying coverage to the those they see as financial liabilities.

Thus, the primary function of the individual mandate is economic in nature. By drawing everyone into the national insurance market the risk is spread and thus lowers overall expenses. Many on the left have argued that this would unnecessarily expand profits for the major insurance companies: a windfall for companies already profiting from sometimes-inhumane practices. The real issue, though, is that in a universally-covered market they would not be able to claim that the high-risk nature of particular insurance markets “force” them to squeeze every possible dime out of their members, while cutting costs on the side by reducing access to care. Remember, the insurance companies are in the business of not paying for health care—which is exactly the paradigm that the Individual Mandate would force them to rectify.