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Posted at 8:26 AM ET, 01/21/2011

Could we replace the individual mandate?

By Ezra Klein

Kaiser Health News asked a variety of health-care experts to imagine the worst-case scenario and come up with ideas for a policy that could replace the individual mandate. This doesn't turn out to be all that hard: Late enrollment can be linked to lower subsidies, as it is in Medicare Part D. Or perhaps there's an open enrollment period every year or two, and if you choose not to sign up during that time, you have to wait for the next one. Another idea is that if you won't sign up at the start, your preexisting conditions aren't covered when you do sign up.

These policies aren't perfect, but they're probably workable. Without Republican votes, however, no fix or reform will be possible. And I see little reason to believe there'll be Republican votes to tweak or improve the law. So the question becomes, what happens if the mandate is removed and not replaced? Mark Pauly, who helped develop the mandate as an adviser to George H.W. Bush, doesn't seem that concerned:

I would prefer to have a mandate to mop up for the well-off uninsured, but I think in the short run we could make a lot of progress with the generous subsidies that are aimed at bringing in the great bulk of the uninsured. Then, we could see where we are and then we could talk about an individual mandate to round up the stragglers. I'd prefer to have one to be safe, but if people are going to get themselves all up in an uproar, then why don't we use the effective tool – subsidies – first and see if we really need it.

The individual mandate has become this enormous distraction which could run the risk of sinking the whole ship. If you had to throw it overboard to save subsidies and exchanges, I would sure throw it overboard myself.

The irony of that outcome is that it pulls the Obama administration back to the plan proposed by the Obama campaign.

By Ezra Klein  | January 21, 2011; 8:26 AM ET
Categories:  Health Reform  
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Comments

Ezra,

do yourself a favor and look back to HIPAA when pre-ex was waived for the group marketplace in these situations where coverage was not dropped. It didn't work. You'll always have people game the system and the ones paying for it will be the ones that don't game the system. Gaming the system happens every day in a myriad of different ways (some of which are completely honest and unintentional). If you're a small employer and your doctors leave Insurance company X's network so you change insurance plans that's technically gaming the system. If your plan changes to a higher out of pocket cost for you and you visit a doctor or hospital before that change takes place so you're given your previous benefits you're gaming the system unintentionally. There are also many that illegally game the system too.


Has CBO scored what they expect will be the percent of the population covered if a mandate is replaced with different alternatives?

Posted by: visionbrkr | January 21, 2011 9:34 AM | Report abuse

Health insurance lobbyists will fight hard to replace, or better yet keep, the individual mandate.

You might be surprised by Republican support for an individual mandate or a close replacement with such a powerful lobby to fighting for it.

As you've said before, now that health care reform has passed, it's developing powerful constituencies to protect it. And that, of course, is the story of progressivism. Conservatives moan, progress marches on.

Posted by: CarlosXL | January 21, 2011 9:50 AM | Report abuse

Could Congress promise states a boatload of money if they institute individual mandates at the state level? (As above, not likely to pass with the current Congressional makeup, but a SCOTUS decision isn't likely soon anyway.)

Posted by: d4t4 | January 21, 2011 9:57 AM | Report abuse

D4T4 above has the best idea: allow (and encourage) sovereign states to implement a mandate if they choose to do so.

At present, the individual mandate is gone: unless some Court intervenes to reinstate the mandate, it will remain a nullity.

At present, the individual mandate is _gone_: unless some Court intervenes to _reinstate_ the mandate, it will remain a nullity. [Said it twice, just to be clear.]

So, any CBO estimate based on the presence of the mandate is, at present, a nullity. Any logic based on the presence of the mandate is, at present, a nullity. Subsidies which relied upon the presence of the mandate are, at present, unfunded.

The "repeal" portion of the PPACA essentially _must_ happen before the "replace" portion. Again, the individual mandate is gone: Congress can either (a) bury its head in the sand and hope that some Court reinstates the mandate or (b) repeal the PPACA outright and reconstruct a new statute which does not rely upon that which Congress lacks the power to do.

Why continue to discuss the individual mandate as if it is something that exists? Some rather fast action is needed to prevent chaos! Merely waiting and hoping that an appeals Court will reinstate the mandate doesn't seem like a viable plan: already, the Supreme Court has refused to intervene in similar decisions of lower courts.

Posted by: rmgregory | January 21, 2011 10:11 AM | Report abuse

A personal responsibility alternative to the mandate (you get to buy only every year) puts the burden for health costs of those who guess wrong on the states (hospital bills aren't paid, classic Medicaid grows). States might want to think about that.
I'm not sure how viable the judicial threat to the mandate is, but at some point, if Democrats in the Senate proposed an alternative, how could it be opposed? Eventually, Republicans would be in a position of voting to save one of the least popular elements of the reform. Can a Republican get through the 2012 cycle as a defender of the mandate? Moving on this before the court case gets to the supreme court clarifies the reason for the mandate and probably improves the case for mandates, assuming we decide to keep them.

Posted by: windshouter | January 21, 2011 10:25 AM | Report abuse

"Another idea is that if you won't sign up at the start, your preexisting conditions aren't covered when you do sign up."

Whoa, whoa, whoa!! This is exactly what happens today, and the insurance companies are demonized for it. So suddenly it's ok to deny coverage for pre-existing conditions, as long as the federal bureaucracy is running the show?

Read back in the history of my comments on Ezra's blogs....I've said multiple times the ACA had nothing to do with expanding covereage, and not one person will get health care with the ACA who couldn't get it before.

The ACA was about shifting ever-more control of an industry to the government....a progressives dream.

Posted by: dbw1 | January 21, 2011 10:27 AM | Report abuse

I'm actually concerned that PPACA advocates might sincerely fail to understand their position:
* PPACA advocates lost representation in the most recent election.
* PPACA advocates lost a decisive case in federal Court.

For some, loss of power -- loss of tyrannical control -- causes some coping issues; however, at some point, such ego issues have to be put aside so that past mistakes, made by PPACA advocates no longer in power, can be corrected. We're sort of at that point: without the unconstitutional individual mandate, there are huge financial and logical gaps in the house of cards known as the PPACA.

In the words of the President, elections have consequences: the election is over and PPACA supporters took a shellacking. Move on! The clock is ticking down toward both the next election and the implementation of what is now an unworkable plan. If those who failed to produce a workable plan -- those who have lost the support of both the Courts and the electorate -- can't recognize their own past failures, how can they become a part of a new, workable solution?

Posted by: rmgregory | January 21, 2011 10:29 AM | Report abuse

rmgrogory: why do you say the mandate is gone? On what do you base this assertion? I'm not saying you're wrong, mind you -- maybe I missed something -- it's an honest question. But as many have pointed out, the individual mandate has a powerful champion in the health insurance lobby. Anything's possible with respect to the Supreme Court, I suppose, but it's just a guessing game at this point as to what the final ajudicaiton will be.

For the record, I'm not a big fan of the mandate. I accept the concept's necessity in prinicpal if you're going to have guaranteed issue and community rating. But in practice it can be a clunky, beureaucratic method (I live in Massachusetts, and the red tape involved in a pain in the neck). I'd rather see the PPACA utilize some of the other methods people have been talking about.

But that brings me to my final point: I'd love to see the Dems call the Republicans' bluff and introduce a stand alone bill replacing the mandate with some other method to curb system gaming under the PPACA. Obama could issue a statement saying "I've listened to voter conscerns blah blah blah and want to work to build concenus and bipartisanship blah blah blah..." Would LOVE to see the spectacle of the GOP trying to fight that one!

Posted by: Jasper999 | January 21, 2011 10:35 AM | Report abuse

Jasper:
"But as many have pointed out, the individual mandate has a powerful champion in the health insurance lobby."

Of course it does! It's free money to the insurance companies, proving that far more of the 'uninsured' Democrats claimed to be helping were in fact uninsured by choice (read: they are young and healthy, and don't need $10k/year comprehensive coverage)

In truth, a much smaller number of the uninsured were 'chronically' uninsured, meaning they wanted insurance and couldn't get it. We didn't need to overhaul the entire system and put millions more on the government rolls in order to fix the cracks that existed for this narrow sliver of the uninsured.

But of course that would have fallen far short of the progressive nirvana of government control of the health care industry, so we have the ACA.

Posted by: dbw1 | January 21, 2011 10:49 AM | Report abuse


Starting this year your child (or children) cannot be denied coverage simply because they have a pre-existing health condition. If you don't have insurance for you and your children search "Wise Health Insurance" online they are the best.

Posted by: blythebarne | January 21, 2011 10:57 AM | Report abuse

dbwl: It's a rather banal observation you make. Absolutely nobdody is unaware that a large portion of the uninsured are young, healthy people. What's your point? I personally wouldn't have a problem with a version of Obamacare that provides affordable coverage for those who want/need it (and currently can't get it), and doesn't force anybody to be insured. But again, that's guaranteed issue/community rating, and that can't be accomplished without money. A more straightforward way to get to the same place would have been a Medicare buy in for those who can't get covered. Or you could implement guaranteed issue/community rating, and provide government reinsurance to pay the cost of system gaming. But either of these methods would have required a big tax increase, and that's not politically feasible.

We have an individual mandate because it was what the political system allowed. The political system didn't allow more robust or straight forward options. I realize a lot of people are now therefore in the "We shouldn't have done anything! Obamacare is terrible!" camp. But I cordially disagree with such people. A system with community rating and guaranteed issue in my view is a big improvement over the status quo for the vast majority of Amerians (ie., the non-rich).

But yes, no doubt about it, an individual mandate is a pretty ugly way to get there.

Posted by: Jasper999 | January 21, 2011 11:03 AM | Report abuse

I too find the solution offered to be ironic, given that this was indeed Obama's position during the primaries: that most people will want the insurance, they just can't afford it. I kind of bought it back then, until I saw just how many people really don't want to get insurance. It boggles the mind, but seems true. Perhaps they are just the vocal few.

I think Obama took that position during the campaign for two reasons: (a) candidates have to distinguish themselves from the other candidates, so they often take positions that they then change upon election (look back at Bill Clinton's position on health care during his primaries; he switched places on election and went for the managed care route); and (b) he is nothing if not a pragmatist who wants to see legislation get passed and get a foot in the door for future direction. I think he always knew the mandate was going to be a political headache.

Posted by: JJenkins2 | January 21, 2011 11:09 AM | Report abuse

Jasper,

medicare buy in's don't work. For a single individual to get comprehensive coverage they'd have to pay (and these are estimates):

1- for entrance to Part A Hospitalization $100 per month (honestly too low but whatever)

2- Part B- currently those age 65 or over pay between $100 and $300 per month based upon income levels so let's say $200.

3-Part C (supplement because as anyone that's on medicare knows it doesn't cover the first $1035 of hospital stays and has other gaps in coverage). These in a guaranteed issue state like mine cost $180-$200.

Part D Prescrptions. These plans cost around $50 per month for coverage WITH a donut hole.


So all told we're up to $550 PER PERSON if we're lucky and these are rough estimates that don't even factor in the adverse affects to providers that would balk at more people being on Medicare and their underpaying cost structures.

Posted by: visionbrkr | January 21, 2011 11:14 AM | Report abuse

A few things:

Jasper - Rmgregory is probably referring to a ruling by the U.S. District Court for the Eastern District of Virginia that the individual mandate is unconstitutional. He ignores several things - for example, the judge did not prohibit the state from working to implement the law. In addition, a half-dozen other U.S. District Courts have dismissed similar suits for various reasons (including one in the Western District of Virginia).

Rmgregory - By no means is the individual mandate "gone". Only one District Court has ruled it unconstitutional - many others have upheld it. The issue is on appeal to several circuit courts, and it seems likely that the circuit courts will issue conflicting rulings as well. This almost guaranties that the Supreme Court will hear the case, since a "circuit split", as this phenomenon is known, on an issue of national importance nearly guaranties resolution by the Court. Justice Kennedy will likely decide the constitutionality of the individual mandate - until that happens, the effect of any rulings will almost certainly be stayed.

For an overview of the status of court cases, see http://www.washingtonpost.com/wp-srv/special/health-care-overhaul-lawsuits//

On a more general note, as progressives, we may want to think long and hard about whether the individual mandate is worth it. I support it in the abstract as good policy, but we need to understand that it has become a huge political liability, and that, on a policy level, it has the potential to drag down the rest of the ACA.

This issue WILL come to the Supreme Court. When it does, the Court will decide whether or not to strike it down - by which I mean, Justice Kennedy will decide. If they strike down the individual mandate, it is very possible that most of the rest of the ACA will go down with it. The question turns on whether or not the individual mandate is "severable" from the rest of the law - the court may very well find that it is not.

On the other hand, if congress acts to remove the individual mandate NOW, then the issue of its constitutionality becomes "moot", and the Supreme Court will be prevented from deciding the issue - and potentially striking down large portions of the ACA.

I'm not sure that the individual mandate is a gamble worth taking at this point.

Posted by: JpS42 | January 21, 2011 11:37 AM | Report abuse

As someone who makes between 60-90k and has no insurance, I would like to shed some light on why I don't have insurance. Pre-existing conditions. Because I am a contractor, employers do not have to expend the cost of buying me coverage. In fact they are willing to pay DOUBLE what I make to keep from hiring me as a full time employee. So I cannot get coverage for my pre-existing conditions which are overweight and high blood pressure. If I do get insurance, it is very expensive and will not cover my issues, even if it takes a decade to see them cause a problem.
What we will see is that there will be fewer and fewer full time employees and more contractors like me. It keeps the employers from increasing headcount while still being able to get more people to work for them.
If I have coverage for pre-existing conditions then it will be worthwhile for me to get coverage. But I am "too rich" for assistance and too poor to keep from losing my house if I get something big. So I have to wait until 2014 and from this perspective, whatever gets rid of pre-existing conditions will be what I support.

But my biggest concern is that although my industry (IT software development) is almost 70% outsourcing and the remaining employment is 80% contracting. We need to look for solutions that take that into consideration since the <50 employees thing can be gamed by companies where they have 1000 people working for them but only 50 are full time employees. Very instable for non-employees.

Posted by: EducatingTheFools | January 21, 2011 11:39 AM | Report abuse

"Health insurance lobbyists will fight hard to replace, or better yet keep, the individual mandate.

You might be surprised by Republican support for an individual mandate or a close replacement with such a powerful lobby to fighting for it.

Posted by: CarlosXL"

You seem to be suggesting that the Republicans will listen to the health insurance lobby. They didn't last year when the industry was giving tons of money and 2/3rds of it to Democrats.

Posted by: cprferry | January 21, 2011 12:02 PM | Report abuse

@educating the fools,

depending on the state where you're in you may want to look into incorporating. if you do this (and have a second employee, your spouse perhaps as a bookeeper) you may qualify for group coverage that could get past the pre-ex issue (again it depends on what state you're in). Most people in your situation in my state of NJ do just that although rules and laws are different by state which is one of the good things that comes from PPACA as it nationalizes some of the regulations.

Posted by: visionbrkr | January 21, 2011 12:06 PM | Report abuse

The increase in Freedom® will enable a mandate-less system to pay for itself.

I think we can all agree Freedom® is priceless, consequently it has infinite value, and that would make health care available to all at no cost to the covered.

(Freedom® is a registered trademark of the Republican National Committee. Used with permission. All rights reserved)

Posted by: davis_x_machina | January 21, 2011 12:12 PM | Report abuse

Ezra,
This would make for a sickening column by Brooks or Sullivan about the "ultra-long-game" wherein Obama was anticipating that a future "Reagan" would campaign against health-insurance-queens or strapping young bucks, gaming the system and suddenly (again) Republicans would forget history and change positions overnight.

Posted by: ctown_woody | January 21, 2011 12:22 PM | Report abuse

"I personally wouldn't have a problem with a version of Obamacare that provides affordable coverage for those who want/need it (and currently can't get it), and doesn't force anybody to be insured.

Posted by: Jasper999"

It's probably important to note that these chronically uninsured qualified for rates capped at 125% of the average premium in 35 states through high-risk pools. As reported earlier this month these are programs that remain more popular than the new federal mandated high-risk pools created Obamacare.

Obamacare seems a rather unnecessary large fix to address a situation present in 15 states.

Posted by: cprferry | January 21, 2011 12:36 PM | Report abuse

cprferry: if you increase that figure from 35 states to all 50 states, AND you replace the "125% of average premium" standard with one based on percentage of income (I mean, 125% of the average premium could mean a lot of different things depending on where we're talking about, and it almost certainly yields a monthly expense plenty of folks couldn't possibly afford), we might have a deal I could get behind. But I don't see the point. It seems to me having one gigantic pool is better than having lots of little pools. And the affordability issue that I care about can't be finessed -- it requires money.

As ever, there's no free lunch.

Posted by: Jasper999 | January 21, 2011 1:32 PM | Report abuse

Can't we just replace the mandate by saying that anyone who doesn't have insurance by 2015, we will automatically enroll them in an insurance plan on the exchanges, and let them proactively opt out of it if they want. I imagine that there are very few people who would choose to uninsure themselves once they already had it, at least not any more than will seek a waiver or be exempt under the current mandate.

Posted by: ahfdemocrat | January 21, 2011 2:37 PM | Report abuse

I went to the linked article - the best quote was at the end:
"In this, Obama's plan is not dissimilar from Obama himself -- filled with obvious talent and undeniable appeal, sold with stunning rhetoric and grand hopes, but never quite delivering on the promises and potential."
So prescient. Describes what happened with financial reform as well, which didn't change any fundamentals, just created another bureaucracy to blame when the next crisis arises.

Posted by: Poster3 | January 21, 2011 4:25 PM | Report abuse

I went to the linked article - the best quote was at the end:
"In this, Obama's plan is not dissimilar from Obama himself -- filled with obvious talent and undeniable appeal, sold with stunning rhetoric and grand hopes, but never quite delivering on the promises and potential."
So prescient. Describes what happened with financial reform as well, which didn't change any fundamentals, just created another bureaucracy to blame when the next crisis arises.

Posted by: Poster3 | January 21, 2011 4:36 PM | Report abuse

I went to the linked article - the best quote was at the end:
"... Obama's plan is not dissimilar from Obama himself -- filled with obvious talent and undeniable appeal, sold with stunning rhetoric and grand hopes, but never quite delivering on the promises and potential."
So prescient. Describes what happened with financial reform as well, which didn't change any fundamentals, just created another bureaucracy to blame when the next crisis arises.

Posted by: Poster3 | January 21, 2011 4:37 PM | Report abuse

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