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Alternatives To Mandating Insurance? Maybe

Feb 07, 2011

Both supporters and opponents of the health overhaul law routinely refer to the requirement that most people get health insurance or pay a penalty as the measure's "linchpin."

But is it?

Not everyone thinks so.

"The biggest fear is that without mandatory health insurance there will be no incentive for people to buy health insurance until after they're sick, and then the system won't work," says Jamie Court, president of Consumer Watchdog, a California-based advocacy group that supports the law, but opposes mandatory health insurance. "I would take issue with that."

Court says the biggest problem with health insurance is that it costs too much. He thinks that rather than having a mandate — which, he point out, is highly unpopular with the public in both parties — more people would buy insurance if only the cost were lower.

"You could offer discounts to people who sign up early. You could increase premiums for those who delay," he says. "Medicare actually does this."

Mostly, says Court, states could be given more power to ensure that insurance companies can't impose premium increases that are unjustifiably large.

"The easiest way to get more people into the health insurance pool is to make health insurance more affordable," he says.

The insurance industry says that's not a good solution, since premiums merely reflect underlying health care costs. But insurance officials seem warmer to some other proposals that could entice more healthy people to sign up without actually requiring them to.

One comes from Paul Starr, a health care expert and professor at Princeton University.

Starr has suggested giving people who don't want coverage a chance to opt out. But if they choose to remain uninsured, he says, "you won't be eligible to opt back in and get any of the benefit of the subsidies or use new health insurance exchanges or buy without pre-existing conditions exclusions."

In effect, he says, "you are basically opting into the world we have now." For five years.

Yet some analysts worry that still might not get enough healthy people to sign up compared to an actual mandate.

Len Nichols, a health economist who teaches at Virginia's George Mason University, says without a requirement for coverage, Congress might have to find another way to make the consequences of not having insurance even more dramatic.

For example, he says, perhaps if people don't buy insurance when it's first available, "if you ever try to buy insurance again, you'll have to pay three times the market price and we will put a gold sticker on your forehead and say to all hospitals, 'You do not have to treat this person, this person has forfeited their right to uncompensated care.'"

Now Nichols is only half serious about that gold star. He's quick to point out that doctors and hospitals are bound by professional standards not to turn away patients in need of emergency care. So he says Congress may want to consider another option: Make the states do the hard work. Lawmakers could withhold federal funding in the health law unless states require people to have health insurance. That's how Congress got states to lower speed limits in the 1970s.

"It would have the virtue of avoiding the constitutional debate," he says. But "it would have the downside of enabling states that were not inclined to expand coverage for their populations. They would then have an out and they would withdraw from the reform."

Nichols says Congress could also theoretically do something Republicans have been pushing — create separate "high-risk" pools for people with pre-existing conditions. Those pools already exist in many states, and there are new, federally sponsored pools to serve as a bridge to the new coverage in 2014. But in both cases they have been underused, largely because they are so expensive.

"To make the premiums humane, the subsidies would have to be quite large per person," he says. "It could be made to work, but most economists think it would be more expensive than what we're trying to do in the current reform bill."

In fact, says Nichols, in the end, "I think the mandate is the best tool to use" to get people covered and make private insurance work.

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