STUMP » Articles » Obamacare Watch: 27 March 2014 -- Do Mandates (and Prohibitions) Work? » 27 March 2014, 06:01

Greg Scandlen argues mandates never work, using auto insurance (as well as other laws) as his example:

Look, it is a fantasy that a group of legislators in Washington, DC or Albany New York can wave their magic wands and make everybody do what they want. A few years ago, I gave a speech to a group of state legislators in Albany shortly after New York enacted a new law prohibiting the use of hand-held cell phones while driving. In the taxi going from the airport to the venue I noticed that every single car on the highway was violating the 55 MPH speed limit, without exception, and at least a third of the drivers were chatting merrily on their hand-held phones.

NONE OF THIS EVER WORKS!

There is always a significant portion of the population in the United States that is indifferent to these laws or too dysfunctional to obey them. That may not be the case in Europe, but it sure the hell is here.

Legislators may make themselves feel good by enacting such a mandate – “We have taken decisive action to fix this terrible problem!” – but passing a law that will widely be ignored does no one any good. In fact, it diminishes respect for laws generally. Legislators would be better off simply passing a resolution – “In the opinion of this body, no one should ever do X, Y, or Z!”

You know what? He’s right! Look at this set of mandates/prohibitions — people break them all the time! Even the people who actually think these are correct break them all the time!

Hey God, YOU FAIL!!!!!

Ok, let’s be serious for a moment. The measure of whether a mandate/prohibition works is not (necessarily) a high rate of compliance. Even in Europe, hell, even in North Korea, there are people who break the rules.

For a moment, let me make a distinction between mandate and prohibition, for which the Ten Commandments have a good example. The distinction I’m making is that a mandate is a proscription to take some positive action; from the commandments, we have the mandates to keep the sabbath holy and to honour one’s parents. A prohibition is a proscription to negative action – that is, you’re supposed to not do something. All the other commandments, with their “thou shalt not“s, are of this type. Now, one could language-lawyer to turn prohibitions into mandates and vice-versa, but I think people have a good gut feel on the distinction. Both mandates and prohibitions are broken all the time, but the dynamic of them being broken is different, and how one would measure compliance is different.

So here’s my own proposed measure for determining whether a mandate or prohibition is working: are the percentages of people who do the required (or prohibited) actions higher or lower after the law?

In that respect, many mandates and prohibitions are effective, and in many cases, extremely effective.

The car insurance example is somewhat bad, because that requirement has been around for a very long time. Let’s look at seat belt use instead, because compulsory seat belt use laws started in the 1980s, so we can compare rates before and after laws being passed.

There are two good Wikipedia articles on this: Seat belt legislation by state and Seat belt use by state. I am not doing a study on this state-by-state (this is left as an exercise for the reader – and it would be something to compare the states that have non-usage as a primary or secondary offense), but here is a chart of the usage rate in the U.S. as a whole over time:

Looks pretty good to me. Seems this particular mandate has been successful.

So, why might this mandate have been successful?

• It is easy and cheap to comply. Every car has seat belts, the comfort of these belts have improved over the years, and it takes only a second to buckle up. It becomes part of the getting-in-the-car ritual.

• The person doing the action to comply gets most of the benefit. I remember some talking about bodies thrown around in a crash injuring other people (which does happen), but obviously the person clicking the seat belt gets the bulk of the benefit of being buckled in. It is far easier to get people to do something done in their own, direct interest than something that is supposed to benefit others.

• I guess I can talk about targeted enforcement (think of the CLICK IT OR TICKET campaigns), that give people the impetus of starting the habit. I’m not sure how true that bit is, but….

• Habitual behavior is hard to break. I’ve been participating in this course on Behavioral Economics from Dan Ariely recently, and he talks about self-herding behavior. But that’s more explaining why one repeats a particular choice, and I guess buckling up is a choice, but those of us who buckle up do it all the time, especially if we’re the driver. We all have our particular driving rituals – sit down, turn on the engine, buckle up, check heat, check radio/CD player, look at mirrors, and then back out and go. I do not consciously think about any of this, but in general that’s how it goes. I don’t even think about buckling except when there’s a trouble with the seat belt that needs to be fixed.

• My point is that I haven’t seen a lot of work on mandate enforcement here recently, but I do remember quite a lot right after these laws were passed. That really kicked off people getting into the habit.

Okay, so fine. Mandates work when you make it easy, make it a habit, and the person following the mandate benefits directly. Also, that the mandate is enforced, at least a lot initially to get people on the path to habitual compliance.

So what about Obamacare and its individual mandate?

Let’s see:

• Even if you wanted to comply, with the exchange screw-ups, it was made very difficult to comply. It still is difficult to comply: Oregon – the worst (and still the worst) state exchange, Exchange Screwup? Sucks to be you.

• And then it was made very costly for some people who were already doing the desired behavior, because underwriting was removed. And a bunch of required coverages were larded in. Remember: Obamacare is Affordable…If You Ignore All Those Other Costs, Are You Ready for Even More Expensive, Required Plans?

• So the benefit of compliance didn’t always devolve to those complying, especially for the young and healthy. Especially young and healthy men. Their compliance generally means other people get the benefit of their premiums. It’s not worth paying thousands of dollars a year in premiums for what is usually only a couple hundred in healthcare costs, individually, but it will sure help insurers with all those 64-year-olds who have signed up.

• And as for enforcement….I have a whole bunch of posts on the ever-shifting requirements.

But forget about that. Here is what just happened:

Oh wait, that’s what they said before. This is what has actually happened

Though the Obama administration repeatedly insisted that its March 31 enrollment deadline for Obamacare’s first year was “firm,” many observers predicted that the administration would combat lagging sales of health law-sponsored insurance plans by extending that deadline. Sure enough, on Tuesday night the White House indicated that it would be postponing that drop date in order to squeeze as many people as possible into the program.

Amy Goldstein of the Washington Post broke the story. Goldstein reports that the revised deadline “will apply to the federal exchanges operating in three dozen states” and extend for two to three weeks.

And they will likely keep extending it as long as they can get away with it.

The numbers must be awful. Surrrre, they don’t know how it’s going.

So again, complying with the mandate is expensive, difficult, the person complying often does not get the benefit of compliance, and there’s no real enforcement.

So while mandates can (and do) work, the Obamacare mandate has not and will not.

Therefore, OBAMACARE MUST BE DESTROYED.