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.

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.
krinchan 28th-Mar-2012 04:52 pm (UTC)
The personal arguments against the law have pretty much sucked.

However, the so-called Mandate is a serious issue that is far beyond the scope of the constitution. I highly doubt any of the Founding Fathers could have planned for this eventuality.

Unfortunately, amending the constitution is nearly impossible in our current political climate.

The best argument I've heard, so far, for the mandate is that every person participates in the health care market by virtue of being alive and living in this country. Because of that, every person has a very real impact on the cost of health care. Because of that, every person has a very real impact on the cost of health insurance.

Hence, you could actually parallel the harm caused by unpaid medical bills to the harm caused by second hand smoke. The country obviously agrees that the government has the ability to regulate your smoking habit on the basis of controlling the harm you cause to people who do not smoke. Hence, the government should be able to regulate your buying health insurance on the basis of controlling the harm you cause when you lack insurance.

Even then, you get pretty tenuous in the legal field. There are a lot of differences that can be used to successfully challenge this. The largest is that you are being forced to participate less in a market (tobacco) in a very indirect way. Also, you have alternatives to smoking, such as smokeless tobacco.

In this case, you are instead being forced to participate in a market you have no which to participate in. You have no alternative to buying health insurance to mitigate your damage to the costs of others, aside from not receiving treatment and dying in a ditch.

This is the culmination of a blind spot in the Constitution and the case law surrounding it. This is a totally new thing in US history. Yes, other countries have done it, but the fact remains that our constitutional setup is somewhat unique in the prioritization of values. I don't remember which justice at the moment said it, but this will "completely change the government's relationship with the individual."

Yes, it benefits you. However, if the SCOTUS is not very careful in how they approve this, you may just hand the government the keys to do a lot more dangerous stuff. Considering the current level of trust I have in the government, I am not too comfortable with that, no matter how much I really want this to be upheld.

I can only hope the justices uphold the law and in their final judgement, they present a very narrow, very specific test of when the government may pass laws such as this.
tsaraven 28th-Mar-2012 06:46 pm (UTC)
I have issues with the tea party/post-2010 congress saying that all laws need to be rooted in the Constitution (which they didn't adhere to anyway) to begin with in all this. You make a good point that everyone (unless they choose to lay in a ditch) does use healthcare at some point. It's hard to accept people saying they have the right to "opt out" when they wind up at the doctor with a bill they can't pay. That being said, I hate all this discussion of healthcare and money. I support the public option.
mirhanda 28th-Mar-2012 05:59 pm (UTC)
I'm not sure you realize how "craptastic" craptastic is. How useful is a hospitalization plan that has a max benefit of $500? Yes, I've seen that. And the employer wanted to charge $100/paycheck for that. Do you know how much even setting a leg costs? $500 is a joke.

As for helping people, if you are living paycheck to paycheck and even then can't afford enough food to last til your next one, even if the gov't comes in and pays 90%, where is that extra 10% coming from? Food? Rent?

This whole thing is a mess, and the public option should always have been there. They should have cut insurance companies out from the beginning.

Edited at 2012-03-28 06:01 pm (UTC)
tsaraven 28th-Mar-2012 06:34 pm (UTC)
I do realize how bad crappy insurance is; I was just saying that it would avoid the fines which is what some people seem to be upset about.

I agree we need a public option. My kids are on Medicaid and I had it through a rough pregnancy. It has been amazing and I wish everyone could have it. I wish I still did, but not enough to get pregnant again.
mirhanda 28th-Mar-2012 06:46 pm (UTC)
The thing is, this will work if all you want is to make sure everyone has "health insurance". But that's not what I want, and I don't think it's what most people want. I want everyone to have access to healthcare. And this crap law does not do that by your own admission. The very people who this was supposed to help are still left out in the cold, only now they have less money because they are being forced to buy some crap "health insurance" that doesn't cover enough so that they can actually afford health care.
theguindo 28th-Mar-2012 08:02 pm (UTC)
Yeah, the biggest worry I had about this law when it first passed was that (afaik) there's no regulation on what insurance plans NEED to cover. With no baseline minimum, you might be forced to buy insurance plans that only provide catastrophic coverage and nothing else because that's all you can afford and anything better is in a much higher cost bracket.
mirhanda 28th-Mar-2012 08:11 pm (UTC)
Seriously. And that catastrophic plan might have a maximum benefit of $500-1000, so is basically useless.
lux_roark 29th-Mar-2012 01:09 am (UTC)
I hate Medi-Cal. I wish I could go back to Kaiser, but that won't happen unless my husband gets a permanent position. There are too many limits on Medi-Cal which hinders certain groups of people from getting the help that they need.
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