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Checking In With Dr. Robert Kocher On Who Might Stay Uninsured In Spite Of The Individual Mandate

Dec 20, 2010

One of the most contentious aspects of the new health care law has been the "individual mandate," a requirement that nearly everyone have health insurance by 2014. Last week, a federal district judge in Virginia ruled that this section of the law is unconstitutional, further fueling the debate over whether the federal government can require people to be insured.

But even if the mandate takes effect in three years, experts acknowledge that some people are certain to still be without coverage. These consumers may have been confused by the system, caught between programs or simply opt to pay the mandate's penalty (that is based on a percentage of income and begins at a minimum of $95 for an individual in 2014 but grows to at least $695 by 2016). Nonetheless, they will fall into a category known as the "residually uninsured" and make up what's been called the "outlaw market." Even during the year's congressional debate, there was much speculation about how big this group might be and whether the result could undermine the push to spread risk and make health coverage more affordable and accessible.

McKinsey and Co., an international consulting company, estimates the number of people residually uninsured will be as high as 40 million in 2016. Dr. Robert Kocher, director of the firm's Center for U.S. Health System Reform and a former special assistant to President Barack Obama on health care, recently spoke with Kaiser Health News' Amita Parashar about the center's estimates and who might not get insured as the health law takes effect. Edited excerpts follow.

Q. How did you come up with the figure that 30 million to 40 million people might remain uninsured after the individual mandate kicks in?

A. We built a simulation that allows us to model each county in the country. The model looks at businesses and individuals, coverage flows and changes over time. The model factors in health conditions, incomes, age and can allow one to make forecasts. … It is difficult to predict how big the residually uninsured market will be since it depends on many factors -- how effective the individual mandate proves to be, how well auto-enrollment works [a provision of the law that will require large employers to enroll employees in a health plan, unless workers choose to opt-out], and how effectively exchanges and Medicaid programs work to enroll people. Depending on what you believe about these factors leads you to a large range for how many people will be residually uninsured. In some scenarios, that pool may be as large as 30 to 40 million people.

Q. Who are the residually uninsured?

A. There will always be a residual pool of uninsured that includes the following populations: undocumented [foreigners], people between jobs, those who may lose coverage from either changes in income [or from] rolling off of Medicaid. Also, the [people whose employer-based coverage] was dropped but who haven't yet purchased insurance; those eligible and not enrolled in Medicaid; and those [who have not enrolled in insurance] by choice.

Q. Who do you think will choose to pay the penalty instead of getting insurance?

A. I'm not sure how big that population will be, but I think it's conceivable that there will be people who are offered employer-sponsored insurance and choose not to take it when they don't have an alternative and are above the income levels that would allow them to get other options. Naturally, there is going to be turnover, too, as people change jobs or move across state lines. There will be gaps in coverage that will hopefully be easier to remedy than they are today. But there will certainly be people who are in transit in the system, too. And there are some people that ideologically may choose not to get coverage, or to self-insure. While I think that's going to be a relatively small population, I expect that there will be some that make that choice.

Q. How will the individual mandate impact the health care market?

A. We're still refining the model, but what we're confident of is that there's going to be a great deal of movement of people in the first few years, with millions of newcomers coming in and getting insurance. Many will go into Medicaid, many will go into the exchanges and there will be many aging into Medicare. And there will be more people shopping on the exchanges, with much more choice. What our model says … is that there is to be a much larger market. Many more people [will be] entering the market and some people who are in the market [will be] making new choices.

It's important to compete in that market. We don't have a fixed view of precisely how many people will get insurance because of the individual mandate, I think a lot of that depends … on how the court cases come out and how different governors choose to implement [the health law].

Q. What will determine how much of the population becomes insured?

A. First and foremost, I think it's going to be how effective the exchanges actually work for consumers. One would hope they're designed in ways that make it very simple to do. … There's a lot to do between now and 2014, I think the number of people who become insured is going to depend on how quickly and how effectively that work gets done.

Q. Massachusetts has had a mandate in place since 2007, and more than 97 percent of the state's residents now have health insurance. What lessons can be learned from that experience?

A. Massachusetts did a nice job on public education. By having the Boston Red Sox help publicize, by using a lot of different channels, they've reached much of the population that perhaps has less awareness about health care insurance and also did a great job of getting young people in. Overall they had a relatively better risk pool and better pricing than you get if they weren't as effective in that area. The plans on the exchange are also well-represented and easy to "shop" for – enrollment is quite fast and easy. I enrolled in a plan on the exchange as an experiment and was impressed at how easy and effective it was to make a choice. It narrowed the choices based on your ZIP code and various factors you put in, which made shopping simple.

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