Government mandates and other regulations can achieve the effect of spending and tax-transfer programs--without being accounted for in the federal budget. In the 1993-1994 debate over health care reform, for example, it was widely recognized that requiring employers to provide insurance to their employees was the equivalent of a tax on employers to pay for a transfer to employees.

Less understood, however, is the transfer occurring from the proposal to require insurance companies to provide health insurance on a community-rated basis. As David F. Bradford and Derrick A. Max show in this volume, such a proposal would, in effect, transfer income from younger and future generations to older ones. According to their analysis, if insurers cannot consider age, gender, or health status in setting a price for their project, the effect would be comparable to a major change in on-budget tax legislation or redistributional transfer programs.

David F. Bradford is a professor of economics and public affairs at the Woodrow Wilson School of Public and International Affairs at Princeton University.

Derrick A. Max is a professional staff economist for the Committee on Economic and Educational Opportunities of the U.S. House of Representatives.