What would a health-care mandate mean for individuals?

What would a health-care mandate mean for individuals?

September 27th, 2009 in Local - Breaking News

By Scott Canon

McClatchy Newspapers

KANSAS CITY, Mo. - A proposal to reform America's health care system by forcing everybody to buy into it has touched a nerve.

The keystone to Democratic efforts to overhaul health care has prompted complaints that Uncle Sam shouldn't be ordering citizens to spend money on insurance, and at the idea that individual Americans would no longer be able to hazard their own risks.

Some even question whether the U.S. Constitution allows Congress to impose such a mandate.

The issue is far from settled, but has taken clearer - if still shifting - form since Senate Finance Committee Chairman Max Baucus, a Montana Democrat, unveiled his $850 billion-plus plan this month.

-What does the Baucus plan mandate?

Put simply, if you don't have insurance already, you'll have to buy it. If your employer doesn't offer coverage, the government will establish cooperatives to sell it to you.

The insurance companies and the cooperatives will not be able to turn you down because of pre-existing conditions. They'll be out of the business of calculating if you're a reasonable risk. In the bargain, they'll get more customers.

Since not everybody will be able to afford insurance - that's the reason many go uncovered today - the government would cover more of the poor and offer tax credits and subsidies to more middle-class families. Congress is debating whether the Baucus bill raises enough money to do that.

-Is the Baucus mandate constitutional?

If it passes, we'll see. A court challenge is almost inevitable.

David Rivkin and Lee Casey, two lawyers who served in the Ronald Reagan and George H.W. Bush administrations, recently argued that a national insurance mandate is unconstitutional. States - Massachusetts already has a requirement - may be able to compel such insurance buys, they said. But the federal government does not have that power over its citizens.

"The Supreme Court has never accepted such a proposition, and it is unlikely to accept it now, even in an area as important as health care," their op-ed article concluded.

Others say the Supreme Court has repeatedly found that in areas that have an impact in interstate commerce - and health care costs certainly play a profound role in the national economy - Congress can make demands on people.

"Even a conservative-leaning court like we have now would be unlikely" to accept an argument that a mandate is unconstitutional, said University of Missouri-Kansas City law professor Doug Linder. "There's nothing in the Bill of Rights that you could look to that would seem to prohibit this."

Harvard law professor Mark Tushnet said cases ranging from prohibitions on growing marijuana for personal medical use to the Endangered Species Act have shown time and again the high court's willingness to let the federal government impose rules on private activity.

-What about those people who don't want insurance?

A young, healthy person might reasonably decide that the cost of health insurance easily outweighs the benefits. Even middle-aged people might come to the same conclusion. In a recent essay in the Los Angeles Times, 53-year-old former Kansas City Star reporter Duncan Moore explained his decision to go without coverage as a calculated strategy. He's healthy, eats well, exercises, doesn't smoke and shops prudently for the health care he purchases - often at a cash discount.

"I still have money in the bank and can afford to pay most bills myself," he wrote. "A disaster costing more than $50,000 would be a problem, but short of that, I could handle it."

Policy analysts say it's important to put people like him and the younger "invincibles" who don't think they'll need doctoring in the insurance pool. A catastrophic illness or accident could quickly outstrip nearly anybody's bank account. Just as important, forcing everybody to buy insurance means that as those invincibles age and become more infirm, another generation will subsidize their rising medical bills just as they would be subsidizing their parents' policies now.

-Would the bill force everybody to shop for insurance?

No. Those covered by their employers' plans would not have to shift. The same goes for people covered by the Department of Veterans Affairs. People who can prove a religious objection, such as the Amish, will be exempt. So will people below certain income levels.

-How will the government know if I've bought insurance?

The Baucus plan would require you to report it on your income tax - similar to the method used in Massachusetts.

-What if I don't buy insurance?

Baucus' proposal calls for fines up to $950 a year for individuals and up to $3,800 a year for families. In the House version, a more complex formula imposes similar penalties.

Critics say it amounts to a tax, and a reversal of President Barack Obama's campaign pledge not to force people to buy insurance and not to impose new taxes on middle-class Americans.

Supporters say it is necessary to any broad effort to make insurance widely and affordably available. They point out that people almost always prefer to buy insurance when the price fits in their budget. In fact, younger workers sign up for health insurance at virtually the same rate as their older co-workers when employers underwrite the bulk of the cost.

-Does the bill account for people who can't afford insurance?

The government will help. Whether it's enough, and whether the plan will raise enough money to pay for the subsidies, is still being hashed out on Capitol Hill.

More people would be eligible for Medicaid coverage. Today, eligibility varies widely from one state to the next, and childless adults almost never qualify. Under the Baucus plan, anyone whose income is no more than one-third over the federal poverty level could get Medicaid.

For those who make more than that, the plans offer tax credits on a sliding scale, depending on income. Only those making more than three times the federal poverty level would get no breaks. Yet even for them, their health insurance costs would be capped at 13 percent of their income.

-How would the bill pay for those subsidies and the newly insured?

Because far more people would have insurance, the government would no longer spend billions reimbursing hospitals for the care they provide to those who cannot pay.

Baucus proposes paying for the plan with $507 billion in cuts to government health programs and by adding $349 billion in new taxes and fees.

The Senate plan looks to raise money for the program by taxing so-called Cadillac employer-based health plans that can cost more than $40,000 a year. Finally, it calculates savings in Medicare by lowering costs - which would almost certainly mean reductions in benefits, lower reimbursement rates to doctors and hospitals, or both.

At the same time, more people will be accessing more health care. So more money will be spent on health care. Today, law requires hospitals to treat patients - regardless of their ability to pay - in emergency medical situations.

But no law requires a hospital or physician to treat the uninsured for chronic conditions such as heart disease or diabetes or to provide, say, cancer chemotherapy. Even the young and healthy will consume more health care if they're insured.

"You want those 25-year-olds to seek good, preventative care in the first place," said Gregory Stevens, an analyst at the Keck School of Medicine at the University of Southern California.

-Who wins and who loses?

"The dirty secret of the mandate is it's a ploy to steal from younger people to pay for the rest of us," said Bill Wilson, president of the conservative Americans for Limited Government.

The mandate is also part of an implicit bargain with the insurance industry, which will almost certainly be forced to accept customers regardless of their medical history.

But supporters of a mandate say it is pivotal to sharing risk and protecting the system against uncovered freeloaders.

"Large, employer-based insurance pools work as well as they do because everybody's eligible," said Sara Collins, a vice president of the nonpartisan Commonwealth Fund, which studies health care policy. "That's how you spread everything around, healthy and sick, young and old."

-What's the track record of health insurance mandates?

The rate of uninsured has fallen from about 13 percent in Massachusetts before the state imposed a mandate in 2007. Today, it's below 3 percent. But the program cost $150 million more in the first year than the statehouse had anticipated. People with private, employer-based insurance kept their old programs. In fact, the numbers in such programs actually climbed slightly.

And Massachusetts has had to continually increase the fines - now more than triple what they were originally - to goad people to buy insurance.

In Switzerland and the Netherlands, two countries that mandate and have a U.S.-like mix of private and public plans and mandate insurance, the compliance rates are even higher. Some analysts say cultural differences might show up in a smaller American compliance rate.

Yet a relatively small number of Americans would be hit directly. Even among the currently uninsured, more would see their employers required to sign them up for coverage, or find that they're newly eligible for Medicaid.

"It's a fairly narrow population," said David Kendall, a health policy analyst at moderate Democratic organization Third Way. "Most people will continue to have job-based coverage."

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