The Mandate Memo: How Obama Changed His Mind

Barack Obama was not always in favor of a mandate requiring individuals to have health insurance—an element of his Affordable Care Act that is being challenged, today, before the Supreme Court. During his long primary campaign against Hillary Clinton in 2007 and 2008, one of the few significant policy disagreements between the two candidates was whether or not to include such a mandate in a health-care plan. In fact, Obama attacked Clinton mercilessly on the issue. Before the Pennsylvania primary, candidate Obama ran a television ad pillorying Clinton for her mandate proposal: “It forces everyone to buy insurance, even if you can’t afford it, and you pay a penalty if you don’t.”

As the Court begins three days of hearings on the constitutionality of the Affordable Care Act, it’s worth asking when exactly Obama changed his mind. Some answers can be found in a memo to President Obama from his top health-care adviser Nancy-Ann DeParle, which I’m posting in full (below). The entire memo is worth reading—it reveals, among other things, that the Administration’s early estimate for its plan was $1.4 trillion and that it debated partially paying for health care with “a 10-cent excise tax on sugar-sweetened beverages”—but of particular interest are passages that include one of the earliest discussions with the President about how he would have to reverse the position he took during the campaign.

DeParle begins by summarizing for Obama the status of legislation in Congress. She notes that Democrats in both chambers are pro-mandate, meaning that Obama’s campaign position now makes him an outlier in the debate. Perhaps to nudge him in the mandate direction, she also reminds him that late in the campaign he started to make some pro-mandate noises:

Individual requirement (i.e., mandate): Both the Senate and House include an individual requirement. Your campaign plan included a mandate for parents to cover their children, but not adults; toward the end of the campaign, you expressed a willingness to consider an individual requirement if necessary to achieve universal coverage.

Later in the document, there are two more notable items. One is that DeParle does not frame the case for the mandate strictly on the merits of the idea. Instead, she points out—somewhat grudgingly—that Obama would almost have to reverse his campaign position because of the way the Congressional Budget Office would treat a health-care bill without an individual mandate:

Based on our policy analysis, we believe that a weak requirement for all Americans to have insurance may come close to achieving the maximum coverage that can be achieved through aggressive outreach and auto-enrollment. Unfortunately, however, the Congressional Budget Office (CBO) will likely take the position that without an individual responsibility requirement, half of the uninsured will be left uncovered. This reduces federal costs—by roughly $270 billion over 10 years—but also reduces coverage (insuring that only 28 of the projected 56 million uninsured in 2014). Those left uninsured tend to be either low cost (e.g., young adults) or have high income.

This was not the last time that the C.B.O., which “scores” all legislation and has a major influence on how issues are framed in Washington, would force Obama’s hand on a significant aspect of health-care policy. In fact, Obama became so frustrated with the C.B.O. that at one point during the health-care debate he banned his aides from using the term “C.B.O.” in his presence. Instead, the President called the C.B.O. “banana.”

The second notable part of DeParle’s discussion of the mandate is that she specifically mentions Mitt Romney’s Massachusetts plan as a model:

Because of concerns about the impact of the individual requirement on middle income families, we have explored coupling an individual requirement with an exemption process for those for whom coverage remains unaffordable. In Massachusetts, taxpayers are exempt from the mandate-associated penalties if the lowest premiums available to them exceed a certain fraction of income (for example at $60,000 of family income, families are excused from penalties if premiums exceed $4,400—about 7 percent of income). There is an additional waiver process that allows people to claim a hardship exemption from the penalty on a case-by-case basis if they have special circumstances.

DeParle's memo makes clear that the Obama White House remained skeptical of the mandate as late as the spring of 2009. Like anyone who has won an election, Obama naturally wanted to avoid contradicting his campaign positions if he could. The President was pushed into adopting the individual mandate by two forces: Democrats in Congress and the C.B.O. When it became clear that it was untenable for Obama to keep his anti-mandate campaign position, his aides looked to Massachusetts to craft their own proposal, which included the same kind of hardship waiver as the state law. (I wrote about the Romneycare connection for The New Yorker last year.)

On July 17th, three months after this memo was sent to Obama, and after House Democrats publicly embraced the individual mandate, the President was asked by CBS News, “Do you believe that each individual American should be required to have health insurance?”

“I have come to that conclusion,” Obama replied. “During the campaign I was opposed to this idea because my general attitude was the reason people don’t have health insurance is not because they don’t want it, it’s because they can’t afford it. And if you make it affordable, then they’ll come. I am now in favor of some sort of individual mandate as long as there’s a hardship exemption.”

Photograph by Chip Somodevilla/Getty Images.