Mandate

REFORM: If You Hold It, They Will Come

Paul Testa — Wed, 11 Jun 2008 19:39:00 -0400

Forget about the Nationals' new stadium (you already had?), the hardest seat to get in town this summer has been at the Senate Finance hearings on health reform. We arrived 20 minutes early yesterday to find the halls of the Senate's Dirksen building packed. And for good reason, as the day's testimony on 47 Million & Counting: Why the Health Care Marketplace is Broken was as refreshing as the room's AC (68.2 degrees!)

The hearing opened with video testimony from Lisa Kelly, of Lake Jackson, Texas. Kelly is one of the 25 million underinsured Americans we wrote about yesterday. Kelly purchased a limited benefit plan with a $189 monthly premium that provided fine coverage for her allergy pills but was woefully inadequate when she was diagnosed with leukemia in 2006. Kelly's trials were the subject of a recent piece in the Wall Street Journal. Forced to dip into her savings and currently saddled with nearly $137,000 in medical debt, Kelly, was asked what she thought Congress should do. Her answer was particularly moving:

"I don't know what's the right or wrong thing to do. I know health care is expensive and that doctor's time and medicine is expensive. But they were charging me for things I didn't need. Everybody should be able to go in and get health care whether you have money or not."

Kelly's testimony set the tone for a particularly interesting hearing that focused on why our current system fails to meet the needs of so many Americans and what to do about it.

Raymond Arth, president and CEO of Phoenix Products, in Avon Lake, Ohio, presented the plight of small businesses on behalf of the National Small Business Association. Until 2003, Arth said, he was able to provide acceptable coverage for his employees while managing to keep costs down. But then, the numbers started to catch up with him. In 2007, his firm faced a 22 percent increase when he tried to renew the insurance plan, He switched to a high deductible plan and was "forced to pay a little more to cover much less." This year renewal rate is 35 percent above last year's, and Arth says he's run out options to deal with what amounts to a $40,000 increase in premiums.

Aetna's CEO Ron Williams, presented the insurers' perspective, stressing that rising premiums and deductibles were a reflection of rising health care costs. He came out in support of an individual coverage requirement, and suggested if such a system could be achieved, bringing everyone into the system, insurers could abandon the current business model of medical underwriting and risk selection and instead focus on improving their members health and managing the quality of care they receive.

Mark Hall, a professor of law and public health at Wake Forest University, rounded out the testimony by emphasizing the "80-20 rule" of health care, which is that about 80 percent of the costs come from 20 percent of the population (for a more academic examination of this distribution check out this recent Health Affairs article). Such a distribution creates incentives for medical underwriting and leads to natural risk segmentation as healthier people select plans with the benefits (and costs) they expect to need. The key, Hall said, was to achieve risk pooling independent of health status.

With all likelihood, the Nationals' season ends in September and D.C.'s Southeast sluggers would do well to add a lefty-righty combination similar to Senate Finance chairman Max Baucus (D-MT) and ranking member Chuck Grassley (R-IA), whose bipartisan leadership on health reform has been impressive early on. Of course, there's no offseason for health reform, and we hope Baucus, Grassley, and all of Congress will continue to step up to the plate.

COVERAGE: Myths About the Individual Mandate: Stifling Competition

Paul Testa — Fri, 21 Mar 2008 15:51:00 -0400

Myth: An individual mandate will stifle market competition.

Fact: An individual mandate, coupled with insurance market reforms and subsidies, would make markets work more effectively and efficiently. By reducing the risk of adverse selection, an individual mandate would force insurers to compete based on price and quality, not underwriting and marketing.

More than half of the uninsured population is under age 34, a generally low-risk, low-cost population to insure.
However, as Mark Pauly and Len Nichols noted in a 2002 Health Affairs article, the individual market where the uninsured might look to find coverage does a poor job of identifying low risks and reflecting those risks in premiums.
Bringing everyone into the insurance marketplace will make the risk pool healthier, creating incentives for insurers to focus on high-value care as opposed to risk selection and underwriting. The recent California health reform initiative included a provision that required health plans to spend 85% of premiums on patient care.

To see all posts on the myths about the individual mandate or for more in-depth discussion of this issue, please read the New America Foundation's recent issue brief

COVERAGE: Myths About the Individual Mandate: Covering All Americans

Paul Testa — Thu, 20 Mar 2008 15:11:00 -0400

Myth: An individual mandate is not necessary to ensure that all Americans have health insurance coverage.

Fact: Many Americans who are eligible for public insurance at little to no cost do not enroll, while others who could afford private health insurance choose not to buy. This suggests a mandate is necessary to approach 100 percent enrollment.

Three highly respected health economists concluded that an "individual requirement to buy or acquire health insurance is a necessary element of any proposal that aims to cover all Americans."
According to research by the Urban Institute, more than 15.5 million people would still be uninsured under a system with generous benefits, subsidies, and sufficient administrative simplification—but no mandate
Researchers have found that when insurance is affordable, compliance is easy, and enforcement is done right, mandates are likely to succeed.

Check back tomorrow when we'll examine common myths about mandates and stifling competition. For more in depth discussion, read New America's recent issue brief.

COVERAGE: Myths About an Individual Mandate: Enforcement

Paul Testa — Wed, 19 Mar 2008 15:18:00 -0400

Myth: An individual mandate is not enforceable.

Fact: Switzerland and the Netherlands have successfully enforced an individual mandate to purchase health insurance. Similarly, some American states have achieved close to 100 percent compliance with a mandate to purchase car insurance.

Enforcing a requirement to purchase health insurance will likely a take series of integrated approaches. Some possible models include:

Electronic Information Sharing: In 2001, Georgia implemented its Electronic Insurance Compliance System for car insurance. In less than two years, Georgia cut its uninsured motorist rate from 20 percent to two percent. For health, electronic information sharing could increase compliance while helping identify and enroll individuals who are eligible for public plans and subsidies.
Proof of Insurance on Tax Returns: While not all low-income individuals file tax returns, the American tax system could be used to identify those people in mid- to high-income brackets who are still not insured.
Auto-enrollment/Insurance checks at point of service: Auto-enrollment into the lowest cost plan available (public or private) provides a way of changing the default status of Americans from unisured to insured. The New America Foundation has outlined how such a program might work to ensure coverage and payment without interfering with care.

Check back tomorrow when we'll examine common myths about mandates and covering all Americans. For more in depth discussion, read New America's recent issue brief.

IN THE STATES: New Jersey Unveils New Coverage Proposal

Elizabeth Carpenter — Tue, 18 Mar 2008 20:44:00 -0400

Can New Jersey afford health reform? Can New Jersey afford to do without health reform? We traveled north to the Garden State today as our very own Len Nichols, (see Len's presentation here ) the AARP, the Rutgers Center for State Health Policy, Governor Jon Corzine, Representative Frank Pallone, and a host of state lawmakers addressed those two key questions.

Most of the buzz surrounded New Jersey State Senator Joseph Vitale, chairman of the health committee, who has introduced legislation that would seek to cover all New Jerseyans in two phases during a three-year-period:

Phase 1: Vitale would require all children to have coverage. He would expand eligibility for New Jersey FamilyCare (the State Children's Health Insurance Program expansion), and introduce reforms to revive New Jersey's struggling individual market.
Phase 2: Vitale would require all individuals to have coverage and create a new insurance option for uninsured residents.

While the reaction to Vitale's proposal is largely positive, some, including Governor Corzine, have expressed concern with the state's ability to finance reform over the long-term. Although Corzine, a former U.S. Senator, regards covering everyone in his state as a policy goal and spoke favorably of Vitale's approach, he views health reform as largely a federal responsibility.

Federal reform is tough but at least Washington lawmakers have access to financing levers—mainly the federal tax system—that are not available to the states. Still, the question on everyone's mind here: Can we really afford health reform amid an economic downturn?

In 2000 the Institute of Medicine put the cost of the poor health and diminished lifespan of the uninsured at between $65 and $130 billion a year (Our own update at New America, which we'll be putting out next week, put the cost at between $102 and $204 billion in 2006). Many health economists believe this is enough money to cover the entire uninsured population. Meanwhile, rising health care costs undermine the competitiveness of U.S. businesses, threaten the stability of middle class jobs, and place increasing strain on federal, state, and local budgets. So the answer New Jersey seems clear: we cannot afford to ignore our struggling health system any longer.

COVERAGE: Myths About the Individual Mandate: Societal Costs of the Uninsured

Paul Testa — Mon, 17 Mar 2008 14:18:00 -0400

Myth: If individuals choose to be uninsured, there are no consequences to society.

Fact: The uninsured increase the price of premiums for the insured and drive uncompensated care costs that taxpayers and health care providers must absorb. They place undue strain on Emergency Departments and other sources of care that impact all of us.

In 2004, the cost of uncompensated care for uninsured Americans approached $41 billion.
Uncompensated care results in a "hidden tax" on the insured, who are forced to pay $700 to $1,300 more in annual premiums to pay for the care recieved by the uninsured.
The burden of the uninsured creates a vicious cycle of cost-shifting, inextricably linking the issues of cost and coverage
Our emergency departments are feeling the strain of uncompensated care. Between 1993 and 2003, 425 U.S. emergency departments closed their doors. Between 1997 and 2004 median waiting times have increased by 36 percent.

Check back tomorrow when we'll examine common myths about mandates and affordability. For more in depth discussion, read New America's recent issue brief.

COVERAGE: Myths About the Individual Mandate

Paul Testa — Mon, 17 Mar 2008 14:02:00 -0400

As we’ve noted before, requiring individuals to purchase health insurance—the so-called “individual mandate”—has figured prominently in the national debate on health reform. From California to Massachusetts to the campaign podium, the concept is a central point of the reform dialogue.

We believe that requiring all Americans to purchase health insurance, coupled with low-income subsidies and insurance market reforms, is a necessary component of a sustainable health system that seeks to cover all Americans. Given the constant echo chamber of op-eds and punditry, we felt it was useful to take a step back to examine common myths about the "individual mandate."

Drawing from a recent issue brief by the New America Foundation, each day this week, we will examine a common myth about the individual mandate. They are:

Monday: Societal Costs of the Uninsured
Tuesday: Affordability
Wednesday: Enforceability
Thursday: Covering All Americans
Friday: Stifling Competition

POLITICS: The Great Mandate Debate

Joanne Kenen — Tue, 04 Mar 2008 15:30:00 -0500

The big health policy difference between Barack Obama and Hillary Clinton is, naturally, the question of the individual mandate. We here at New America do support the idea of requiring everyone to be insured (with adequate subsidies for low-income people). But we are glad that the dispute is increasingly being seen as a disagreement about means, not a war about ends, that can be resolved reasonably amicably when Congress takes up health reform next year. And we suspect that outside the health care cognoscenti, most people would agree with the New York Times piece this weekend that called it a fight about "the narrowest of bands in a broad policy spectrum." We also liked these two recent Op-Eds in the Los Angeles Times on mandates. Jacob Hacker rightly reminds his fellow mandate supporters that the focus needs to be on coverage itself, not mandates. And Ezra Klein explains why we'll all still be complaining about the intrinsic flaws of health insurance if we don't get everybody in the pool. We also note that we've seen several good "big picture" pieces about the rationale for health reform, including this recent one on NBC featuring New America's own Len Nichols.