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The Baucus Bill: Individual Mandates

Anyone who would have to spend more than 10 percent of his or her income to purchase the minimum plan is exempt. For those of us above 300 percent, the cost of forgoing insurance coverage is $980 a year. The maximum penalty a household can pay is $3,800 (i.e., Jon and Kate Plus Eight, if they were still married, would pay $3,800, not $980 x 10).

To contextualize that, a recent study by the Center for American Progress estimated that the average family's premiums are $1,100 higher because of the care hospitals and doctors provide to the uninsured and bill to the insured (by raising prices). This is, on some level, paying for services that will be rendered. It's not a penalty as much as it is a charge, as the uninsured actually do use care, and the rest of us actually do pay for it.

By Ezra Klein  |  September 16, 2009; 2:21 PM ET
Categories:  Health Reform  
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Comments

Yes, but political speaking the uninsured never noticed the costs before - they were invisible, whereas they more certainly will do so now. Since I suspect that a large proportion of the uninsured are Obama voters, I suspect that they will be most unhappy.

Posted by: valeskoi | September 16, 2009 2:39 PM | Report abuse

What Democrat is going to want to run on that? None.

Posted by: andgarden | September 16, 2009 2:56 PM | Report abuse

So basically when it boils down to it catastrophic coverage is now set at $80 a month for individuals. Thats because these individuals will be completely able to buy into the healthcare exchange and cannot be denied because of a pre-existing condition or because of risk if they get in an accident or get sick. I can't imagine how much the insurance companies will have to jack up the rates for everyone who is on the exchange to compensate for this.

Posted by: spotatl | September 16, 2009 3:01 PM | Report abuse

I really wish they would factor in what region of the country you're in when coming up with the $980 figure. what's $980 in NYC isn't what's $980 in Mobile Alabama.

Posted by: visionbrkr | September 16, 2009 3:03 PM | Report abuse

It's important to define what type of care the uninsured are receiving that the insured are paying for. Is it preventive care or emergency care? My understanding is that it is emergency care. If that is the case, it makes sense that everyone should have at least catastrophic only coverage. But the Baucus bill, if I understand it correctly, requires everyone over an arbitrarily chosen age of 25 to have full coverage. Why not let catastrophic only insurance satisfy the mandate for adults of any age?

What are your thoughts on the "young invincible" policy (page 18) and how it relates to the mandate?

Posted by: valerierose1 | September 16, 2009 3:08 PM | Report abuse

Thanks for tackling this issue a bit more head-on. While I understand the logic of requiring the uninsured to buy insurance or pay into the system -- since they at least receive emergency care no matter what -- there still seem to be two big political problems that, in your recent move away from normative judgments, you seem to still avoid discussing.

The first is a moral matter: are we subsidizing this bill based on what is essentially a highly regressive tax -- ie, requiring the poorer middle class to pay into the insurance pool in order to lower costs for those who already have insurance?

The second is political pragmatics: is it wise to pass a bill that would require so many people to pay so much, regardless of the justification? Even if you are okay with requiring so many lower middle class people to pay to make your insurance cheaper, is it really good politics to so heavily fine so many voters?

Posted by: Ulium | September 16, 2009 4:52 PM | Report abuse

Catastrophic insurance does not deal with the cost shifting issue, depending on what the defition of 'catastrophic' is. The standard high deductible plans do not really have that large a deductible (often about $5000), but they aren't that much cheaper than full coverage plans either, so they are unlikely to be attractive to the currently uninsured. A true high deductible plan (say $25,000) leaves a lot of costs to be shifted to other payers if the enrollee does not have the scratch to cover the deductible. Also, I have not really seen any discussion about the issue of what provisions would cover shifting plans - suppose you had a $25,000 deductible plan and got cancer, would you be able to switich to a first dollar coverage plan and get it at the community rating cost? Doesn't seem like that would work, does it?

Posted by: exgovgirl | September 16, 2009 4:57 PM | Report abuse

exgovgirl- I don't think any catastrophic coverage plans will be allowed on the exchange. Thats the point. The new catastrophic coverage is only paying the individual mandate until you get sick or get in an accident and then buy into the exchange where insurance companies would not be allwoed to discriminate against you just because you had a prior condition.

Posted by: spotatl | September 16, 2009 5:06 PM | Report abuse

Ulium,


heavily fine? Its $980 and if its more than 10% of your income you're exempt. I'm sorry but in many areas the fine isn't nearly enough. It needs to be looked at as money into the system ($980 per year) vs money out of the system (healthcare costs).

Sorry its not even close. One ER visit and you're there. And that's just to spend 6 hours waiting to see a doctor for 10 minutes.


exgovgirl,

HDHP's that are part of an HSA are not that high and are regulated so that they're not that high. Most cap out at around $2500.

And as for your example the rules of open enrollment wouldn't allow a change like that although there are always ways around the system. A small employer could change coverage from one insurer to another and would likely be picked up day one. Again its nothing more than gaming the system which happens every day and is a large reason why costs are so high.

Posted by: visionbrkr | September 16, 2009 5:07 PM | Report abuse

@ visionbrkr

Go out to those 8 millions folks and tell them "it needs to be looked at as money into the system". If you're a family making $40,000 a year, $1,000 of new expenses is a huge amount. I agree that a single emergency room visit costs more than that, but the solution to the problem of millions of people being unable to afford insurance is not to force them to buy insurance. It's like saying the solution to people being too poor to buy food is to force them to buy food. It's a real problem, but a terrible solution.

Posted by: Ulium | September 16, 2009 6:20 PM | Report abuse

@Ulium Agreed. This bill seems like the worst of both worlds -- it doesn't do enough to make insurance affordable, but it requires people to pay for it or pay a regressive tax. I can imagine there will be people caught in the middle who still won't be able to afford insurance, won't qualify for subsidies, and will now be fined for it.

Posted by: valerierose1 | September 16, 2009 8:02 PM | Report abuse

None of these bills do anything to make healthinsurance more affordable because none of these bills are willing to do anything to control costs. We have a cost problem in this country yet democrats are treating it like an insurance problem simply because the insurers are easier to demonize.

Posted by: spotatl | September 16, 2009 8:53 PM | Report abuse

ulium,

uh, your theory works fine except that person would get a subsidy of from what i can tell up to 80% of their premium so they would pay the equivalent of $600 a year for insurance coverage as per Ezra's post from yesterday and the attached example:

http://voices.washingtonpost.com/ezra-klein/2009/09/affordability_in_the_baucus_bi.html

Maybe they shut one of their cell phones off so they can afford healthcare at $50 a month. That's less than $2 a day.


Posted by: visionbrkr | September 16, 2009 9:47 PM | Report abuse

Whether it's $600 a year, $3,800 a year, or 10% of their income a year, it's still a new regressive tax that hits only the lower middle class. Though of course it's not a tax, since it goes into private pockets ... and of course, it doesn't buy anything but the most minimal service. As a plan to help those without insurance, it stinks; as a plan to lower costs for those of us who already have insurance by forcing the lower middle class to pay more, it's great. ...Except, of course, no one thinks this thing will really "bend the curve" very much either.

Posted by: Ulium | September 16, 2009 11:04 PM | Report abuse

This issue that spotatl raises about gaming the system for $980 is an interesting idea we'll have to hear more about.

Posted by: bmull | September 17, 2009 4:57 AM | Report abuse

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