is entering the final weeks of a major effort to reform the state’s health insurance system
Good for them and in particular good for Governor Schwarzenegger
who is willing to tackle this most prickly of domestic policy issues!
and the legislature
will need to get a deal done by the end of September if it is going to happen in this session—or maybe for a long time to come.
As we have learned in Massachusetts
, health care reform
is hard and inevitably has uneven results. But the alternative, doing nothing, gets us nowhere.
In health care reform
, no pain—no gain.
The big issue in California
is whether to have an individual mandate
or not.Governor Schwarzenegger
believes an individual mandate
is necessary to get everyone covered and spread the risk across the largest pool—therefore providing the most efficient cost.Democratic leaders
, who control the legislature
, oppose a mandate
in part because of opposition from labor groups trying to avoid the direct cost of expensive health insurance
on workers. They would rather concentrate the burden on the employer
community proposing a 7.5% minimum payroll contribution.Hospitals
are also objecting to a provider tax
It seems that worker groups
, health plans
, and doctors
all have in common the notion that California
should have universal coverage
but only the employer
should have to pay for it.
That’s the subject of another post.
While most of the California
debate’s focus is today on whether there should be an individual mandate
, or an employer mandate
, or both, let me suggest that is not the big question for California policymakers
As we have learned in Massachusetts,
is a moot point if individuals
, or employers
, can’t afford the cost of insurance
, a health insurance plan
with a $2,000 individual/$5,000 family deductible
costs around $200 per month per person at an average age of 37. For a 55-year-old the cost is around $500 per person per month.
The good news is that Massachusetts
looks like it has already covered about 150,000 people that didn’t have health insurance
before the new law. But there are somewhere between 200,000 and 400,000 more who still do not have coverage.
When all the Massachusetts
data is in, my bet is that we are going to see the very low income (under 200% of poverty), who get almost 100% subsidies, fairly well covered and those with little or no subsidy help still unable, or unwilling, to buy the coverage.
Those between 200% of the poverty level and 400% of the poverty level are going to be particularly pained to buy coverage because they make too much for assistance and too little to pay for it on their own.
In an earlier post, I argued that you don’t need an individual
or employer mandate
to make a health insurance reform
My training as a health insurance
underwriter many years ago taught me that to have an efficient “spread of risk
” you only need to get 70% to 80% of those offered coverage to sign up.Employer plans
do not require their workers to sign up and they almost always get an efficient spread of risk. The Part D Medicare drug plan
and has achieved a very efficient pool, as has the Part B portion of Medicare
, which is also voluntary
, Medicare Part D
, and Medicare Part B
all have in common the fact that they are affordable because either the employer
, or Medicare
, pays most of the cost so the remainder is affordable for employees
. Medicare pays 75% of these costs and employers also typically pay 75% of the cost of health insurance
, just like Massachusetts
before it, is focusing on the wrong thing—making people buy insurance and whether to do it through an individual
or employer mandate
Don’t get me wrong. The most equitable form of health reform
is one everyone is a part of. Freeloaders don’t help health reform efforts. But I would not let health care reform fail over the issue of whether there should or shouldn't be a mandate.
This whole debate over whether to mandate
or not misses the critical point: Have we made the cost of health insurance affordable for individuals and employers?
It’s also hard for me to see how health care reform
can have any chance of being affordable unless the burden is spread across the greatest number of stakeholders—individuals, employers, health plans, doctors, hospitals, and taxpayers
Give credit where credit is due in Massachusetts
. But I hope California
doesn’t make the same mistake Massachusetts
made in focusing too much on mandates and too little on how to offer a health insurance policy people can afford.
Related post: The Mandate Myth--Health Reform Plans Don't Have to Mandate Coverage to Work But They Do Have Be Affordable
But maybe we won't have a practical choice other than just getting everyone covered and let the resulting out-of-control costs drive the rest of the solution: The “Realistic” Way to Do Health Care Reform