ONTD Political

Could the health-care law work without the individual mandate?

9:25 pm - 03/27/2012
If the Supreme Court were to invalidate the 2010 health-care law’s requirement that virtually all Americans obtain insurance, would the rest of the law become unworkable?

Even among supporters of the statute, opinions vary widely about the practical impact of a decision to strike down the mandate but leave everything else intact — one of several options available to the court.

“It’s probably the the biggest area of uncertainty around all estimates about the law,” said Larry Levitt, a health insurance expert with the Kaiser Family Foundation.

The Obama administration argues that requiring individuals to get coverage is essential to the success of two of the most important — and popular — regulations that the law will impose starting in 2014: a rule that insurers can’t discriminate against people with preexisting conditions, and limitations on how much they can vary rates among customers.

Many of the law’s supporters insist that without the mandate, these rules would impose an unsustainable burden on insurers, ultimately causing the market to implode.

In fact, the government contends that if the mandate falls, these provisions should be struck as well. With no requirement that they buy insurance ahead of time, this argument goes, people could wait until they were sick to purchase a plan, skewing the insurance pool toward the ill, who are more costly to insure.

“That’s not a hypothetical,” said John McDonough, a professor at the Harvard University School of Public Health.

He points to New Jersey, New York, Kentucky and Washington, which attempted to introduce similar insurance regulations in the 1990s. None included a requirement that residents obtain coverage. The resulting disruption to the states’ insurance markets was cataclysmic: Rates skyrocketed, and many insurers simply stopped offering plans.

But Levitt argues there is an important reason that the impact at the national level might not be so dramatic: In contrast to the state laws, the health-care statute will offer millions of Americans generous subsidies to help buy private plans.

This means that many more people — including healthy people — who are not currently buying insurance because of its cost will be prompted to enter the market voluntarily.

“It becomes a much better deal for you. So you are more likely to enroll even without a mandate,” Levitt said.

Paul Starr, a health policy expert at Princeton University, agrees and points to the high enrollment rates for Medicare’s Part B and Part D plans, which cover doctors and prescription drugs; in contrast to Medicare’s hospitalization plan, they are optional.

“Seniors don’t have to sign up, but they do because it’s a good deal,” Starr said.

He also notes that complex “risk adjustment” mechanisms would protect private insurers that end up with a disproportionately sick pool of customers.

The potential interplay of all these factors may explain the tremendous variation among statistical estimates concerning the mandate.

The Congressional Budget Office has calculated that without the mandate, insurance premiums on the individual market — the sector most vulnerable to fluctuations — would be 15 to 20 percent higher than with it. One respected researcher puts the difference as low as 10 percent, another at 27 percent.

Similarly, while the CBO estimates that the number of Americans remaining uninsured would jump by about 16 million without the mandate — about 40 percent more than if the health-care law were implemented intact — other analyses suggest that the number could be nearly half that.

Starr and others also contend that estimates of the mandate’s effect may be overblown.

For all the controversy it has ignited, the mandate is actually fairly weak. Penalties will ultimately be set at $695 or 2.5 percent of income — whichever is higher — and there is a hardship exemption for people who can’t afford insurance even with a subsidy. While the government can collect the penalty by counting it against a person’s federal tax rebate, it will be barred from using other collection tools such as placing liens or threatening incarceration.

There is a robust debate within health policy circles about alternative approaches that could achieve the same aims as the mandate through less controversial means. For instance, Congress could automatically sign up uninsured people for the least expensive private plan available to them, allowing them to opt out but counting on human nature to ensure that most wouldn’t bother doing so. Or, give people the choice to either buy insurance or give up the consumer protections in the law for five years. States could also step in and enact their own mandates.

one_hoopy_frood 28th-Mar-2012 02:19 am (UTC)
there is a hardship exemption for people who can’t afford insurance even with a subsidy.

Good, but there should be no mandate without a public option. We need a public option.

Edited at 2012-03-28 02:19 am (UTC)
grace_om 28th-Mar-2012 02:27 am (UTC)
If we had the public option, we wouldn't need the mandate -- the mandate was the original Republican plan which Obama compromised to without even trying to push a public option. A public option would be WAY better.
telemann 28th-Mar-2012 03:43 am (UTC)
With Republicans in the house and the Senate? Ain't going to happen. That's the only reason Obama's bill final passed in the first place was because there was no public option. And Dems had a 59 vote majority in the Senate.

Edited at 2012-03-28 03:54 am (UTC)
mirhanda 28th-Mar-2012 05:45 pm (UTC)
THIS!!!! There would need to be no mandate if everyone were automatically covered.
maenads_dance 28th-Mar-2012 02:33 am (UTC)
I really dislike the Affordable Care Act for a number of reasons, but I'm terrified it will be struck down. I'm twenty-one; if not for the changes in legislation, I'd have no health insurance right now, and my two hospitalizations this fall would not have been covered. My family can afford to help me at the moment, but could not afford my health care if I lost insurance. I'm an unemployed student, and wouldn't have the ability to buy even catastrophic coverage, let alone the kind of comprehensive insurance I need.

So I feel awful: on a self-interested level, I really need the ACA to be upheld, but as a matter of principle and thinking about the long-term needs of the country, I strongly dislike the law. I started out really enamored by it, but the more I read about it, the less I like it.
theguindo 28th-Mar-2012 02:35 am (UTC)
and there is a hardship exemption for people who can’t afford insurance even with a subsidy.

So they...what? Aren't insured? Please tell me this is not a crack for the working poor to fall through.
one_hoopy_frood 28th-Mar-2012 02:40 am (UTC)
That's exactly why the mandate as it stands is only good for insurance companies. It forces people to pay into insurance who most likely don't have it for a reason or face a fine; if they're ~lucky enough to be SO POOR that they can get out of it they are still without insurance.
(no subject) - Anonymous
layweed 28th-Mar-2012 03:02 am (UTC)
Yeah....I'm pretty sure the SC can't do that. At best, they could probably have something mentioning a recommendation of the public option in their judgement.
24_24_1_1526 28th-Mar-2012 04:28 am (UTC)
not even gonna lie, LO got some points with me when i found out he was dating tamron hall. i wonder if they cuddle and discuss topics in the dead of night.
daniilm 28th-Mar-2012 04:53 am (UTC)
Private health care won't work w/o individual mandate. Period. It's basic economics of markets with adverse selection.
circumambulate 28th-Mar-2012 07:53 am (UTC)
That doesn't make it constitutional, unfortunately.

The SCOTUS can't uphold laws just because they're a good idea, they have to be constitutionally sound,as well. While that sucks at times like this, it sucks less when it also means that a bunch of crappy laws get slapped down, too.
atomic_joe2 28th-Mar-2012 08:21 am (UTC)
Heathcare should be based on clinical need not ability to pay.
tsaraven 28th-Mar-2012 01:54 pm (UTC)
I hate how both liberals and conservatives get behind the "waaaaah mandate!!" thing. :/ Who would that really affect? People with money who refuse to buy insurance? I don't have insurance because I can't afford it, and I fall in the categories of either expanded Medicaid or tax credits to pay for insurance. I really don't understand the anger. You either already have insurance which means no penalty, or you don't and fall into one of two categories: you can't afford it and there will be provisions to help you in 2014, or you can afford it and refuse. Those people seem to only have the "it's about my freedom to refuse!" argument. Perhaps constitutionally it may not hold up and the healthcare act will be killed, but that doesn't make it right. And are we really that mad about a single person making $60,000 a year or a family of four making $100,000 a year having to pay a couple thousand dollar fine to help pay for other people because they refuse to buy insurance? Would we be angry at them having to pay that money in taxes to pay for other's insurance? I know conservatives still would be, but liberals?

I realize that the money given in tax credits may not be enough to have GREAT insurance, but even if it only pays for a craptastic discount-type or catastrophic insurance, then you have it and therefore don't have any penalty (and it's more than you had before). Maybe then in the future we can work on a better idea.
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