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Are people in Massachusetts gaming the individual mandate?

By Suzy Khimm

A Boston Globe story argues that thousands of customers are trying to game the Massachusetts health-care system by buying coverage when they need it and dropping it right afterward, despite the individual mandate to be insured:

In 2009 alone, 936 people signed up for coverage with Blue Cross and Blue Shield of Massachusetts for three months or less and ran up claims of more than $1,000 per month while in the plan. Their medical spending while insured was more than four times the average for consumers who buy coverage on their own and retain it in a normal fashion.

As the Globe explains, the difficulty is that the penalty for not buying insurance in Massachusetts only goes up to $93 a month -- which is much cheaper than paying for insurance coverage each month. And if mostly healthy people only buy insurance when they need it -- for expensive treatments like knee surgery, let's say -- it leaves a disproportionate number of sick people in the pool, which could end up raising premiums for everyone.

Insurers in Massachusetts are already claiming that such practices are directly responsible for jacking up rates. And the state government is now considering ways to limit enrollment periods and impose other restrictions to discourage mandate-dodging and encourage people who can afford insurance to have continuous coverage. However, as Austin Frakt cautions, there's still not enough data and research to determine whether these practices are actually having a notable impact on premium rates -- and those who are claiming that's happening all have a reason to distort the facts. After all, Frakt points out, there can't be that many people disregarding the individual mandate in a state where 97 percent of people are covered.

It's especially critical to find out exactly what impact the individual mandate is having in Massachusetts given its close parallels with the federal requirement that will take effect in just a few years. The new federal law's penalties for not complying with the individual mandate are similarly low. And by prohibiting insurers from denying coverage to those with preexisting conditions and limiting the waiting period to three months, the Affordable Care Act could make it even easier for people in Massachusetts and elsewhere to buy and drop insurance coverage when they want -- if they decide to disregard the mandate to be insured year-round.

Ezra and others have argued that doing so would take a cynical customer -- someone who would disregard the impact of one's individual actions on the well-being of others, as well as their own future insurance rates. But unfortunately, I do think that more than a few customers will be tempted to go down that path, since the penalties of not complying with the mandate will be so weak. As a result, supporters of health reform will need to be bolder about emphasizing the moral and civic imperative of buying insurance for those who can afford it -- and how collective non-compliance could jack up everyone's own premiums in the future, as Jonathan Cohn argues.

It's the same argument for "individual responsibility" that conservatives had originally used to defend the mandate, as Cohn notes, quoting Mitt Romney's own previous defense of the provision: "For people who can afford to buy insurance, it's time for them to step up to the plate and buy that insurance.” Now that conservatives like Romney have decided to assail the mandate in their war on Democratic health reform, reform advocates will have to take up the argument themselves with the same moral conviction.

— Suzy Khimm is a journalist who covered health-care reform at The
New Republic and is now a political reporter at Mother Jones.

By Washington Post editor  |  April 6, 2010; 1:56 PM ET
Categories:  Health Reform  
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My understanding is that one of the new services that the highly sensorized cars of the future will be able to offer is a wireless connection that will purchase insurance (or additional insurance, if the owner so chooses) in the instant before an accident is going to occur.

Posted by: bdballard | April 6, 2010 2:01 PM | Report abuse

Reporting from Massachusetts -

One thing that has happened is people getting insurance who haven't had medical care for years or even decades. They now have insurance and go to the doctor for something they would have treated on their own before. (Feral cat bite in one case.) Doctor sees someone with no medical history and freaks out, ordering up every test and exam they can think of (whether to earn the fees or because it is felt necessary, I leave to your imagination). Person looses low-paying job that allowed them to buy insurance (observed case 1)OR decides that doctors are all evil money grubbing scum and that they don't want insurance after all (observed case 2).

In short, I think this may be due to the doctors gaming the system as well as the patients, and... even self-purchased insurance is somewhat employment based.

Posted by: maryarrrr | April 6, 2010 2:14 PM | Report abuse

If the current public mood continues, I expect there will be large numbers of Tea Party members who will game the system out of a misguided sense of patriotism, in an attempt to bring it down. The universal mandate only works if there is a basic level of goodwill towards the system. We have that in Massachusetts. I don't know that we'll have it in the country as a whole when the new Federal mandate kicks in.

Posted by: alms | April 6, 2010 2:18 PM | Report abuse

I already am planning to drop my coverage. The $5k year is alot higher than the penalty. I still can keep my accident policy for injuries and then sign up for this Super great Obama plan once I get ill! Win/Win!

Posted by: jercary | April 6, 2010 2:23 PM | Report abuse

Suzy, What I think you are missing is that not all the people who choose not to buy health insurance are "gaming the system". That is, if indeed they are not buying into the system now for knee operations and the like, not everyone incurs medical expenses. Not everyone gets sick.

Instead of encouraging folks to be responsible for their own health and bills (which so many demonstrably are -- not incurring or consuming any medical services), you will need to encourage them to PAY FOR OTHERS BILLS. Those who do require prescriptions, services, procedures that their own premiums are now not covering.

We've skewed the PROBLEM in the system you see. It's not the majority of the uninsureds "gaming the system" by not having bills, and leaving nothing unpaid. (and remember, the health needs of undocumented workers are still not addressed in this "reform".)

It's that the pre-existing sick who cannot afford the costs of their own current care tht is the issue to be addressed, so the need is for others to mandatorily contribute via unused premiums. No wonder healthy folks would rather donate $93 monthly in fees, than the higher costs of unused premiums, also contributing to helping others.

Posted by: Mary42 | April 6, 2010 2:33 PM | Report abuse

In short, this plan took the easy way out, and compromised by giving the insurance CEO's what they wanted: millions of mandatorily "contributing" customers who consume no services (or will they now have incentives to treat for their premiums, like their less healthy now "insured" poolmates? Think about that one before you go telling us medical services won't be affected, or rationing won't occur).

The CEO's earned their bonus pay this year, in seeing this corporate gift passed, that's for sure.

Instead of addressing medical waste, and the need for current consumers to begin paying for their basics, so their is some incentive to limit medical consumption and practice more preventative, and commonsense measures*, we just sucked the young and healthy into paying the bills, some years down the road.

Posted by: Mary42 | April 6, 2010 2:47 PM | Report abuse

My wife was insured through a private insurer via the state exchange for a few months, but then we got married and now she is on my insurance. Is she being considered a "gamer"?

Posted by: pegstander | April 6, 2010 3:07 PM | Report abuse

Wow! You can't be serious that 936 (0.014%) of the people in Massacheusets actually 'gamed' the healthcare system. Thank goodness the prison population of 22,778 doesn't figure out this nefarious plot to bilk honest taxpayers out of their hard earned cash! If this tradgedy happens nationally, there would be a whole 50,000 people nationwide! Quick, hold a rally to stop this tradgedy!!

Perhaps the Boston Globe could spend more time auditing, say, any single roads project in the entire state and thereby save taxpayers 10x as much money. I realize that after the Big Dig any swindling in Massachusetts roads projects with less than nine zeros after it is small potatoes, but still.

Posted by: Jaycal | April 6, 2010 3:23 PM | Report abuse


no she is not. That's a qualifying event. There should be rules of open enrollment that apply and if you drop off you shouldn't be allowed back on but once a year so you can't game the system like the cute suggestion that bdballard had.

The mandate is too small in MA but its even smaller in this new law so its about to get a whole lot worse come 2014 and as premiums far outpace the penalty the problem will only get worse.

Posted by: visionbrkr | April 6, 2010 3:27 PM | Report abuse

The universal mandate only works if there is a basic level of goodwill towards the system. We have that in Massachusetts. that a load of bull. If it went to the voters we'd vote it down! I tell every young person I see without insurance and tell them to pay the fine until they need insurance. Those dupes at Mass health don't have a freaking clue any way.

Posted by: obrier2 | April 6, 2010 3:39 PM | Report abuse

I would think that the insurance companies would have the 'gamers'' names in their databases and see this?
And why doesn't MA have some insurance dept. office that keeps track of people who drop insurance- require them to furnish information as to residence and prove new insurance coverage if they are still MA residents? If they need assistance because of a salary loss, etc., then they can apply right then.
I mean, it is a mandate, people should have to explain-like auto insurance.

Posted by: dcunning1 | April 6, 2010 3:48 PM | Report abuse

Can I get some confirmation that the individual mandate will be $695 or 2.5% of income whichever is higher? I have thought that healthcare reform was doomed to failure because the mandate was trivially small, but if its really 2.5% of income that makes me feel a ton better about it. But this isn't something that has been widely publicized and the $695 is all that gets talked about.

Posted by: spotatl | April 6, 2010 3:50 PM | Report abuse


it STARTS at $95 in 2014 and goes up to $695 but its 2.5% UP TO $695 but caps there.

Yes it will be easy to game to those that want to and that's always been the fear.

Posted by: visionbrkr | April 6, 2010 3:56 PM | Report abuse


I'm not so sure. My concern is how these so called "gamers" are being counted. From what I am reading, the count seems to only be of people who signed up for insurance, ran up large bills in some cases, and then dropped coverage. but I see no measure of how many of signed up for insurance, then dropped it because they could get insured by another method, like my wife.

Posted by: pegstander | April 6, 2010 4:06 PM | Report abuse

Thanks visionbrkr- I was going off of Ezra's article where he said it was $695 or 2.5% of income whichever is higher and it did make it seem like the mandate had more teeth. I can now go back to believing that this is all doomed to failure.

Posted by: spotatl | April 6, 2010 4:16 PM | Report abuse

bdballard- from this link 300k of accident insurance costs $9 a month.

I'm no expert and maybe this isn't representative of what you would have to pay to supplement your individual mandate but that doesn't seem like an oenerous price.

Basically how the invidual mandate works is as an ultra cheap catastrophic coverage plan for everyone. I just don't think the individual mandate is nearly strong enough to keep people from just waiting till they get sick.

Posted by: spotatl | April 6, 2010 4:23 PM | Report abuse


i'm now reading in several places after reviewing it that it may be whichever is higher. That would be better but i'm still worried it won't keep pace with premium costs which almost everyone admits are going to continue to skyrocket. I've gotta re-read the most recent manager's amendment to be sure.

Posted by: visionbrkr | April 6, 2010 4:31 PM | Report abuse

I don't think you can call it "gaming the system" if someone looks at the costs of purchasing coverage and discovers that he/she is really much better off economically paying the fine. That is just enlightened self interest. I'm a big supporter of healthcare reform, but I also know that there will be a non-trivial number of people for whom the subsidies will not be enough for them to truly be able to afford healthcare. Just for example, someone who is self-employed and makes a middle class income but is trying to put a couple of kids through college.

Posted by: AuthorEditor | April 6, 2010 4:32 PM | Report abuse

From Glen Johnson of the Associated Press: "The top health insurers in Massachusetts on Monday filed a lawsuit against state insurance regulators, arguing a premium rate cap imposed by the Patrick administration on small business health plans was arbitrary, politically motivated and could lead to losses in the 'hundreds of millions of dollars.' [...] Insurers say capping their premiums without controlling costs addresses the effect without dealing with its cause. [...] In their lawsuit, the insurers asked that their proposed rate increases take effect as had been planned on April 1. Alternatively, they asked that while a trial is being held, the difference between the premiums they asked to charge, and the ones the state said they could charge, be put in an escrow account awaiting a verdict."

The state already pays out an average of $7,423.08 in tax dollars to each Medicaid recipient (9th highest in the nation, compared to $3,095.06 in Arizona, $3,323.61 in Georgia, and $4,024.22 in Florida) and now the "individual mandate" is likely to force higher costs on paying consumers.

Good luck, Massachusetts! I hope nobody tries such a system elsewhere, as it might bankrupt us all in short order. Oh, wait...

Posted by: rmgregory | April 6, 2010 5:00 PM | Report abuse

"If the current public mood continues, I expect there will be large numbers of Tea Party members who will game the system out of a misguided sense of patriotism, in an attempt to bring it down. The universal mandate only works if there is a basic level of goodwill towards the system."

Well, there isn't a "basic level of goodwill towards the system". In fact, about 60% of the people are really REALLY PISSED OFF about it.

And you can thank the Democrats who single-handedly rammed through, mostly by crook, an unpopular bill and then wonder why everyone is so upset.

That's what you get when you rule rather than govern.

Posted by: WrongfulDeath | April 6, 2010 5:04 PM | Report abuse

"Good luck, Massachusetts! I hope nobody tries such a system elsewhere, as it might bankrupt us all in short order. Oh, wait..." least the insurance industry will continue having record profits, so some portion of our society will be solvent.

Posted by: Jaycal | April 6, 2010 5:07 PM | Report abuse

When it comers to citizens, we are reminded of our civic duty. The notion that insurance companies should be expected to adhere to basic human decency however is considered socialism.

Posted by: theamazingjex | April 6, 2010 5:08 PM | Report abuse

Generally, the proportion of people 'gaming the system' will continually go down, in my view. Anyone who has been ill with no health insurance because of not being insured through an employer, or is self employed without a large income, it is eventually discovered that insurance is not needed at all!! This is because it costs less to get private care than it costs to pay insurance.
Perhaps a FEW of the uninsured will go back to buying insurance, out of fear? But care is available at a reasonable price, while insurance is NOT available at a reasonable price. I spent less for 2 rounds of cancer treatment in a year, than I would have paid in premiums ALONE. I doubt the run-of-the-mill insured worker has any idea this is true. And if care costs ever get under control, it's even better for those of us saving our own money and paying medical costs out of our own pockets.
Why would I get insurance for a while, then drop it? People are unreasonably aftraid of getting sick. If I could not pay for care, there's even government help under many circumstances. I brought up 2 kids with disabilities and health issues and it was only insurance that almost caused us to go to the government system for care. Thank goodness we realized it, cancelled insurance, and went to private care which was better than using providers who accepted our insurance.
I cried for people who had such great insurance that they were slaves to. Submitting paperwork to appeal every claim can be hazardous to your health.

Posted by: carlzwife | April 6, 2010 5:11 PM | Report abuse


Your point is basically SOP for businesses. Is it cheaper to dump hundreds of thousands of waste oil in a river, or pay the EPA fine?

Although I have a feeling there won't be any political parties speaking out against the 'unfair burden' of government enforcement on individuals deciding about maintaining health insurance.

Posted by: Jaycal | April 6, 2010 5:12 PM | Report abuse

I think a major opportunity has been missed. Missed by Congress, missed by the major media and probably missed by the people who are making all of the noise.

We have heard that the the Patient Protection and Affordable Care Act of 2010 will extend health insurance coverage to 32 million uninsured Americans, allow young adults to remain on family insurance plans until age 26, and require that insurance companies no longer reject people with pre-existing medical problems such as ADD/ADHD, or deny coverage for any treatment related to the pre-existing condition.

What we have missed is that there was a specific benefit for the right wing: the Tea Partiers, the independents and the conservative Republicans. Where it says, ADD/ADHD, insert, paranoia, hysteria, schizophrenia, bipolar and other mental illnesses which will now be covered.

We should say, "You haven't been left out. Help is on the way. If you have insurance or if you get insurance from the high risk pool, or from the exchanges, mental treatment must be provided just like physical treatment."

Obviously, people who are hysterical, who are paranoid, are extremely angry or depressed by events (passing of this bill) that normal people find reassuring or comforting, need help. The friends of these people should be explaining that the situation is much better than they believe and soon they can get help.

Those who are saying the opposite are just exploiting their mental illness, and have their own illness which can also be treated. They should all be celebrating.

Posted by: ronames | April 6, 2010 5:52 PM | Report abuse

" least the insurance industry will continue having record profits, so some portion of our society will be solvent."

This is a 'talking point' and is largely not true. The healthcare insurance industry returns about 3-5% on dollars line with most other industries. See link...

Posted by: WrongfulDeath | April 6, 2010 6:21 PM | Report abuse

Jaycal, you make it sound like there is something morally wrong with someone deciding to put their kids through college instead of paying for health insurance. What I am saying is that despite the subsidies there will be people who can't afford the premiums because of their income or other life events. Other folks might lose their home in a flood and not have flood insurance, so they will decide to go without health insurance for a few years. They will pay the fine because it will be the right choice in their situations. I don't consider that "gaming the system."

Posted by: AuthorEditor | April 6, 2010 8:27 PM | Report abuse

AuthorEditor: "They will pay the fine because it will be the right choice in their situations. I don't consider that "gaming the system."

I agree, and yet they will be demonized for shirking their civic duty.

visionbrkr: The penalty, $695 or 2.0% of income, whichever is greater, was added by Reid's manager's amendment (PPAC, page 2101 line 2) and increased by Obama's reconciliation bill to $750 or 2.5%, whichever is greater. And while the IRS cannot assess penalties or a lien to collect delinquent amounts, the legal interest rate does apply and the law is unclear if it may affect your other business dealings with the IRS.

Posted by: bmull | April 6, 2010 9:51 PM | Report abuse

What's interesting is that it is only four times the average. That doesn't seem like a lot. Heck, if you go to the doctor once a year, and someone goes once in three months, that is literally four times the average rate.

Posted by: Hopeful9 | April 6, 2010 10:57 PM | Report abuse

With ninety-seven percent of people in Massachusetts insured, writing a story about 936 individuals who may have used the system to their advantage seems a relatively trivial issue indeed.
As to her statement " doing so would take a cynical customer -- someone who would disregard the impact of one's individual actions on the well-being of others," many businesses and persons do this on a regular basis in many areas of society.

Look at all the supposedly environmentally conscious persons, as well as those oblivious to such concerns, for but one example, who drive large vehicles having low gas mileage and/or who live in unnecessarily big homes, leaving a greater carbon imprint upon the planet.

Posted by: Aprogressiveindependent | April 7, 2010 1:04 AM | Report abuse

I am going to take a serious look at the financial realities of Obama's new system and if it to my financial advantage to 'game' the system I will do it. I will make a personal financial calculation; a new Progressive definition of what is considered my 'moral' obligation to comply with coerced charity will carry no weight.

Posted by: mcgerm1 | April 7, 2010 12:56 PM | Report abuse

The fine is still way too low to change the optimum strategy. Health insurance costs thousands of dollars a year, paying 695 bucks to wait until you need expensive health care to buy insurance is a great deal. Imagine if for a tenth of the price of car insurance you could buy the right to purchase car insurance right after you got in a wreck. In effect, the Democrats and Obama just gave Americans a new option: disaster insurance with 20-20 hindsight.

Posted by: ChristopherCarr | April 13, 2010 12:22 PM | Report abuse

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