Can You Really Mandate People To Buy Health Insurance?
That's not so much a policy question as a practical question and it is what Hillary Clinton seems to be saying is the big difference between her health care reform plan and the health reform plan of Barack Obama.
That's why a news story this week out of Massachusetts caught my eye.
It seems that the Mass Department of Revenue is in the process of drafting new regulations to up the penalty for people who do not buy health insurance. If they are approved, the maximum penalty for those who do not buy health insurance would jump from $219 per year to a maximum of $912 in 2008. The penalty is estimated to be half the per person cost of the lowest priced health plan available.
Penalties would vary by age and the time a person was without health insurance. A 26 year-old would have a penalty of $672 per year and those over 26 would pay $912. So, a family of two adults over 26 would pay about $1,800 in penalties if they didn't buy health insurance (a reader has correctly pointed out children are not covered by the mandate).
The state health plan administrator--The Connector--has said that about 290,000 of the states 400,000, that were believed to be uninsured when the program was launched, have purchased coverage. But most of these people are those that get either all or most of their premiums paid by the state. Among those who get no subsidy, relatively few have chosen to buy insurance likely because they cannot afford the thousands of dollars in premiums for the minimum policy with a $2,000 deductible.
At a practical level, we are talking about middle class families being required to buy a health insurance policy costing $6,000 to $9,000 a year (with a $2,000 deductible) or having to pay a $1,800+ penalty.
The Connector has already exempted thousands of residents from the mandate because there was no way they could buy the coverage.
It is notable that the senior Medicare Part D drug benefit is voluntary but the vast majority of seniors have purchased it. Why? Because the government pays 75% of the costs and it is affordable. The Part D experience shows that if insurance coverage is affordable people will buy it.
The Massachusetts experience tells us if it is not affordable, people will not--or maybe more appropriately cannot--buy health insurance.
It's one thing to mandate health insurance coverage, but as we are learning in Massachusetts, the real challenge is making it affordable.
On the issue of health insurance mandates, Barack Obama, and the Republican candidates, are right.
Earlier posts: Hillary Clinton Criticizes Barack Obama's Health Care Plan Saying It Would Not Cover Everyone--Is She Right?
California Health Care Reform—An Individual Mandate is Nowhere Near as Important as Affordable Health Insurance
14 comments:
Is the Medicare Part D experience really applicable? Seniors know they are much more likely to need health care; therefore, much more motivated to purchase it.
What's the comparison when you only consider low-income seniors?
Carlos:
I think the Part D experience is very applicable.
It is also notable that most employers pay 75% of the cost of health insurance and a very large % of people buy it--there is no mandate that you buy your employer's plan. The feds pay 75% of Part D and it has very good participation. Medicare pays 75% of the cost of Part B and it also has great participation--again it is voluntary.
The key here is an affordable cost--provide affordable cost and people buy it--at work, Part D, Part B.
Don't provide affordable cost but mandate it--like Mass--and they don't/can't buy it.
I did a more detailed post re this issue earlier: http://healthpolicyandmarket.blogspot.com/2007/02/president-bush-has-proven-strategy-to.html
Of course you can mandate that all people pay for health care according to their ability. Everyone pays taxes for Medicare and everyone who is disabled or over a certain age has their health care paid through Medicare.
If we expand this coverage to everyone then we avoid the morass of mandate enforcement.
>WonksAnonymous said...
Of course you can mandate that all people pay for health care according to their ability.
You can if you are Karl Marx.
>Everyone pays taxes for Medicare and everyone who is disabled or over a certain age has their health care paid through Medicare.
Not so.
One can opt out. Just because you are 65 doesn't mean you MUST pay those premiums.
And some people have alternatives to Medicare.
>If we expand this coverage to everyone then we avoid the morass of mandate enforcement.
And we would either bankrupt the Republic or watch an exodus from the medical profession.
I think this brings up another great truth: mandating coverage is not the panacea big government types would like us to believe.
Let me shout this from the mountaintops in two distinct pieces:
1. The problem is affordability, NOT accessibility.
2. Premiums are increasing because the cost of practicing medicine is going up.
We do not need to replace our current system with something that is much worse. If government plans are so great at controlling the costs, why is Medicare spending up 19%? I believe trend this year for the private sector was around 12% on average and as low as 7% in certain markets.
Some observations from Boston . . . .
Monkey Incognito --
We have both problems - affordability and accessibility. Witness the difficulty that some of the newly-insured in MA have in finding a PCP, and the national trends re: graduating MDs shying away from primary care, thanks to procedure-skewed physician reimbursement. Can't deal with only one issue -- we need to address both, sequentially if not simultaneously.
Bob --
The alternative to insurance coverage here in MA to date has been: "Oh, the free care pool will pick up the cost." The problem there is that only hospital costs were covered, and they got only pennies on the dollar. So free care could pick up the full cost of care for individuals who cannot afford the premiums, but then we'll need a tax hike to pay for those expenditures -- and that just isn't in the cards. The free care pool is restructured under the new MA law as a pool funded in part by penalties such as the ones you discuss in your post, and the pool monies are to be spent buying insurance for those who can't afford it. Sure, the devil's in the details . . . . but the underlying problem is not with Massachusetts, it's with the historical accidents that brought us to where we are today -- where many people think of health care as a right with no price tag attached.
If people are exposed to the true costs of "free care," then pay-or-play doesn't look too bad by comparison. It's either that, or unpalatable tax hikes.
(1) At a practical level, we are talking about middle class families being required to buy a health insurance policy costing $6,000 to $9,000 a year (with a $2,000 deductible) or having to pay a $1,800+ penalty.
You got it wrong. The $2000 deductible and up to $5000 out of pocket is for an INDIVIDUAL. A family or couple have a $4000 deductible and up to $10000 out of pocket. (And this does not include the separate deductible for prescriptions of $250 individual/$500 family.)
(2) Anonymous wrote:
"One can opt out. Just because you are 65 doesn't mean you MUST pay those premiums. "
Sorry but you are IN on Part A if you worked the very minimal required number of quarters or if your spouse did.
Part B is $95 a month.
Part D is all over the place - and the cheaper the coverage, the fewer drugs it covers and the more restrictions placed upon obtaining a drug.
The ONLY options to Medicare B are:
(a) Tricare (military)
(b) Employer sponsored health insurance for retirees - and that is vanishing faster than snow in July as employers dump that coverage to save costs thus sending the people solely into Medicare. Additionally, a lot of employer plans require that the person care Medicare B so that it picks up whatever the employer plan does not ths allowing the employer to lower the benefit levels.
Ann:
Thanks for correcting me on the individual versus family deductible!
The problems in Massachusetts are predictable, when you consider who actually created the legislation.
The fundamental problem with our health care system is that health care is treated as a business commodity. When Americans stop doing that, good solutions for our health care miseries can evolve.
Health care should be directing the dollar bill not the reverse, which is our current modus operandi.
Define what health care is and make that the new bottom line, and a wonderful health care system can result.
R. Garth Kirkwood MD
http://www.equalhealthcareforall.com
doctork@equalhealthcareforall.com
Hi David, look at one of the big debates in MA re: accessibility. The attempt by Menino to prohibit health clinics in retail establishments. Doesn't it seem strange that the problems on all sides seem to be caused more by government intervention?
Update: Menino lost his battle. Hopefully you will see greater access for minor medical as well as lower costs.
Wonks Anonymous is highly flattered to be mentioned in the same sentence as Karl Marx. He would nevertheless like to take exception to the comment by Anonymous:
Mr. Anonymous speaks as if universal health care did not already exist in these United States which indicates that he has obviously not read deeply on health care policy or even listened to his beloved president.
The US does have a universal health care policy. It is called EMTALA and a succinct analysis of the policy can be found at:
http://wonksanonymous.com/2008/01/01/the-united-states-already-has-universal-healthcare.aspx
Although this policy is not very good It seems to be better than the full free market alternative, letting sick people who are unable to pay for care die on the sidewalk in front of the hospital. Wonks Anonymous suggests that it can be vastly improved on if we all get over the illusion that there is a pure market solution to the health care issue.
I appreciate your view about health insurance.I think it is necessary part of life and can't force on people for
Health insurance plans.so everybody want be health insurance plan.
When it come to health insurance, the plan that would hurt our economy the least is Hillary Clinton's plan. Everyone would have health insurance. WA, NJ, NY and a few other states who have already tried Obama's proposed health insurance plan of not mandating coverage. These states have driven out of the better insurance companies. When anybody can get health insurance without having to go through medical underwriting, people won't get coverage until they absolutely need it. Usually because of a serious illness. This causes health premiums to sky-rocket. That's because insurance companies are only paying claims for unhealthy people. The plans in these states tend to not be that great either. If everyone has health benefits, the premiums would be less because healthly people would factor in on determining the premium.
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