Individual Mandate

COVERAGE Making Mandates Work (Nudge, Nudge, Nudge)

Paul Testa — Tue, 27 Oct 2009 15:12:00 -0400

Economic decisions are rarely the product of a simple costs-benefit analysis. This is particularly true of the decision to purchase health insurance, where the costs are upfront and certain, while the benefits are uncertain and down the road.

Requiring that all Americans purchase health insurance confronts this challenge, and it is a central aspect of the current health reform legislation in Congress. The so-called individual mandate is necessary to make other insurance market reforms like community rating and guaranteed issue work. Coupled with subsidies to make insurance affordable, the individual mandate can be an effective tool for coverage expansion.

The debate in Congress focuses mostly on whether the penalties for not purchasing health insurance ($750 in the Senate Finance Bill) relative to the coverage subsidies are enough to actually influence people's decisions. The success of an individual mandate, however, depends on more than just subsidies and fines, and Monday's Washington Post lays out some important lessons from the field of behavioral economics.

One of the central insights of behavioral economics -- reflected in recent books like Nudge, which was co-authored by the White House's Cass Sunstein -- is that the choices we make are often determined by how easy it is to make them. As Brookings' William J. Congdon tells the Post:

Non-financial things matter. ... When the choice itself is complicated, it can deter people from making choices. The small hassles associated with taking up programs -- driving to an office, filling out a form -- have a disproportionate effect in discouraging people.

One way of rectifying this problem is through the creation of insurance market exchanges, or new marketplaces that can simplify the process of purchasing insurance and applying for subsidies. Massachusetts's Connector serves as a model, but policy makers could also learn from other states' efforts to simplify and streamline enrollment in programs like Medicaid and SCHIP.(Here's a Kaiser Commission on Medicaid and the Uninsured issue brief on "express lane" innovations in enrolling poor kids.)

Compliance with an insurance mandate should be easy, Columbia's Sherry Glied tells the Post, and enforcement should be quick and routine. For example, state efforts to enforce auto insurance mandates are telling. Two years after implementing an electronic insurance compliance system, the state of Georgria cut its uninsured motorist rate from 20 percent to 2 percent. Investments in health IT from the stimulus would facilitate the cooperation and coordination needed to ensure high rates of participation.

Compliance and enforcement are important in implementing an individual mandate, but the long term success of a mandate is to alter people's expectations for insurance coverage. As the Post notes, after passing reform, Massachusetts worked hard to sell reform and raise awareness:

The Boston Red Sox promoted the mandate, pharmacy loudspeakers intoned it, grocery store receipts carried reminders and churches coaxed congregants. The Health Connector held 200 meetings with employers and two dozen outreach sessions, community groups received funding to help people sign up, and residents got red-lettered postcards in the mail.

And it worked: A Health Connector board member told Glied that a typical comment from young adults coming to sign up for coverage was: "My mom said I had to sign up for health insurance or I would get into trouble."

Granted it may be more difficult to find a sports team to sell reform in D.C. because the only people with less credibility here than the government are the Washington Redskins. Still, Gilbert Arenas may need something to do after he blows out his knee a week into the NBA season.

HEALTH POLITICS: Reid Ready to Present Merged Bill In Senate

Meredith Hughes — Mon, 26 Oct 2009 16:33:00 -0400

Details are firming up in the merged Senate health care reform bill, reports The Wall Street Journal (subscription required). Here's a preview of major provisions that appear to be highly likely to make it into the final bill:

Public option. The Senate bill will contain a public option, reports the WSJ, but states can opt out. Reid came out in favor of a public plan with an opt out last week, according to The New York Times. Some theorized the White House preferred a "trigger" for the public option, appealing to moderates like Olympia Snowe (R-ME). But the White House Blog said that President Obama and Reid are pursing the same strategy, and the president supports both a public option and Reid's efforts to create a final Senate bill.

Individual mandate. The individual mandate means that everyone will be required to purchase health insurance or face a fine, with exemptions for those who can't afford insurance. Employers with more than 50 workers don't have to provide health care for their employees, writes the WSJ, but they would be fined up to $750 per employee if any of their workers receive government subsidies to purchase insurance. That represents a larger penalty than the original Senate Finance bill, which had a fine limit of up to $400 per employee.

Coverage and affordability. The bill will cover most -- although not all -- of the uninsured. Subsidies will help low and middle income Americans purchase insurance. The final bill will also increase coverage for low-income individuals by expanding eligibility to Medicaid. (The WSJ didn't give the precise ceiling for Medicaid coverage in the final bill -- but the Finance bill went up to 133 percent of the Federal Poverty Level and the HELP bill went up to 150 percent FPL. For more comparisons check out the Kaiser Family Foundation's side-by-side reform bill comparison tool).

Senate Majority Leader Harry Reid plans to send the final merged Senate bill to the CBO for scoring, reports Politico's Pulse, so expect him to report a final version of the bill to his caucus as early as Tuesday.

HEALTH POLITICS: Frist Would Cast a Republican "Aye" For Reform

Allison Levy — Mon, 05 Oct 2009 19:27:00 -0400

When Bill Frist was Senate Majority Leader, he did not advance the cause of comprehensive, bipartisan health reform and will be remembered for his role in the Schiavo case (although he did take heat for working with Democrats to expand federally-funded stem cell research). Mostly he pushed for malpractice reform (in a very partisan model) and for small business purchasing pools (also from a GOP perspective). If there were compromises to be had under his watch, he didn't have them.

Better late than never.

We've watched Frist over the past few months. As we've noted, he has backed a fairly expansive approach to prevention and population health, and recently endorsed the individual mandate (which was a centrist Republican idea before it became a Democratic idea). Now he tells Karen Tumulty of TIME that he'd vote for the Democratic health care reform bill in Congress -- even if there's a lot in it he isn't crazy about. (He later told ABC News Radio that he doesn't like the Baucus bill as currently drafted, according to the Politico.)

"I would end up voting for it," he told TIME. "As leader, I would take heat for it. ... That's what leadership is all about."

Some of what he criticized in the health reform proposals in the Democratic Congress isn't the usual party line stuff either -- he wants the bill to do both more to "bend the curve" and fundamentally realign incentives for doctors and hospitals. He also worries that the final version of the bill might only cover an additional 20 million Americans, falling short of the goal of universal coverage.

He also brings up a good point -- something we've begun talking about among ourselves but haven't written about much yet. Implementation is hard. And Republicans will have three to four more years to continue attacking the hard parts before people begin to reap the benefits. Karen writes:

The first few years are likely to be rough, he predicts. States will be struggling to set up new marketplaces for insurance coverage, their Medicaid rolls will grow, taxes will go up, and consumers will not yet see the benefits. "The Republicans will go wild," using the start-up difficulties as a tool for fundraising and for making their case in the next election, Frist says. "In the Congress, nobody's thinking about that." His advice for the Obama Administration: "Stay nimble," and be prepared to make adjustments as difficulties arise.

Frist might be more nimble as a transplant-surgeon-turned-policy-wonk than he was as a politician, but it doesn't hurt to have a prominent Republican physician/politician on the side of reform (does Senator Snowe read blogs?) particularly as the political debate gets ever more strident.

COVERAGE: There's No Subsitute for the Truth About Insurance Market Reforms

Paul Testa — Wed, 12 Aug 2009 16:30:00 -0400

The Wall Street Journal has an editorial out Wednesday purporting to tell the truth about health insurance reform -- an admittedly hard thing to find these days.

Not surprisingly, the conservative editorial board opposes proposals for guaranteed issue and community rating. Such reforms, where implemented, have raised costs, the Journal says.

Ironically, in attacking these reforms, which are designed to make the individual insurance market more affordable and fair for all Americans, the Journal is really making the case for an individual mandate.

Yes, "if insurers are forced to sell coverage to everyone at any time, many people will buy insurance only when they need medical care," which is precisely why every comprehensive health reform proposal being discussed, requires all Americans to purchase health insurance. Yes, community rating could lead to adverse selection, unless all individuals, healthy and sick, old and young, are required to purchase health insurance.

A requirement to purchase health insurance is the lynchpin that makes other insurance market reforms work. Insurance companies can afford to sell to all comers only if they know everyone is coming. When you have everyone in a system, community rating allows the risks and costs of health insurance to be shared evenly, with premiums that are affordable for all. Finally, with everyone in the market paying their fair share, insurance companies will have to make profit not by selecting risk, but by providing value.

That's what insurance market reform is about, and that's why requirement to purchase health insurance is necessary to make these other reforms works. Why the Journal fails to see this, or chooses to ignore it, is unclear. We'd suggest they read their own op-ed pages, and in particular, a piece in 2006 from then-Governor of Massachusetts, Mitt Romney:

With private insurance finally affordable, I proposed that everyone must either purchase a product of their choice or demonstrate that they can pay for their own health care. It's a personal responsibility principle.

Some of my libertarian friends balk at what looks like an individual mandate. But remember, someone has to pay for the health care that must, by law, be provided: Either the individual pays or the taxpayers pay. A free ride on government is not libertarian.

COVERAGE: The Constitutionality of an Individual Mandate

Julie Barnes — Thu, 06 Aug 2009 19:24:00 -0400

Most people want to have health insurance -- and many people desperately need it. That's part of what's driving the push for health care reform legislation. But as more Americans realize that health care reform means that they MUST purchase health insurance, more people are asking whether this "individual mandate" is constitutional. Over and over again, we hear that it is and we shouldn't worry our wonky heads over this relatively non-controversial issue. (I'm a lawyer by the way so my head is both wonky and legalistic -- I actually like thinking about things like the constitutionality of mandates).

Tim Noah just wrote a well-researched piece in Slate about this issue. Tim found that an individual mandate is unprecedented -- which is what we concluded when we started asking around and thinking about this. Whenever you have the federal government issuing a brand new edict you're going to have controversy (think about the laws governing voting and drinking ages...). But this is the first time that the decree is contingent on just being alive and an American -- it is not tied to a privilege (owning a car) or doing something wrong (thieves go to jail).

According to Noah and others, the legal scholars' analysis of whether the "must get health insurance" proclamation is constitutional boils down to how the provision is drafted. If it is drafted under the tax and spend powers, no problema. The federal government can impose a tax on individuals who choose not to purchase insurance and be well within its powers offered by the Constitution. (Article I, Section 8, Clause 1 is known as the tax and spending clause of the Constitution: "The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States.) So, if you stay within the confines of the tax and spend powers, it is less a question of a mandate than it is about whether Congress has the power to enforce it . It seems clear that it does.

The controversy, if there even is one anymore, is whether an individual mandate can be considered an unconstitutional "taking" by the federal government. This is really a property law concept, where the government seizes personal property for a public use but fails to fairly compensate the owner. It seems, though, that the constitutional scholars agree that forcing individuals to pay a private insurance company a premium to purchase private insurance is not taking money or property at all. It is mandating a bargained-for exchange -- money for health benefit coverage. So, again, it is not a "taking" -- the only government imposition here, for constitutional purposes, is a tax penalty for the failure to purchase insurance. Taxes may not be popular, but they are SO constitutional.

COVERAGE: Finance Outlines the Options for Covering All Americans

Joanne Kenen — Mon, 11 May 2009 22:43:00 -0400

Senate Finance Chairman Max Baucus and ranking Republican Chuck Grassley just released the second installment of their health care policy options—this one on covering all Americans. Yes, the public plan is part of the mix, but it takes a few different possible forms. An individual purchase requirement or mandate is also in there. So are insurance market reforms and a standard benefit package that human beings can actually understand is in there. We haven't read through the whole document yet but wanted to bring it to your attention. Please note that Baucus and Grassley aren't endorsing everything that's in the document, but they are setting parameters for a serious and wide-ranging discussion.

Tomorrow, the Senate Finance Committee will host a roundtable discussion on financing comprehensive health care reform. As always you can follow our coverage of the event on Twitter (tag: #SenFin).

HEALTH REFORM: Hope Street Gives Us...Hope

Health Policy — Fri, 03 Apr 2009 18:04:00 -0400

The Hope Street Group, a nonpartisan, ideologically diverse group of business and policy leaders, has agreed on a core set of health reform principles aimed at comprehensive reforms that will create a system that is both more economically sustainable and socially equitable.

Here are the 8 main points (in abbreviated form... for more nuance, click the link above)

High quality, affordable basic health care coverage for all, including preventive care
New payment and incentive models to promote coordinated care and reward higher value and better outcomes
Faster generic drug introductions
Strengthen primary care and prevention to improve public health
Establish a comparative effectiveness entity with dissemination authority
Quality and price transparency to help people make informed, value-conscious decisions.
Promote investments in "wiring" the health care system
Promote a health care system that is both fiscally responsible and sustainable, for both the private and public sectors

"The fact that such a diverse group could agree on so many fundamental tenets of comprehensive reform gives me great hope about our nation's prospects in the months ahead," said New America health policy director Len Nichols, one of the signatories. He said agreeing on an individual mandate was a particular step past "a key philosophical barrier."

The organization's Bipartisan Working Group began meeting in June 2008. Later this month, Hope Street Group holds its third annual Opportunity Economics Colloquium, during which participants will join with other political, business and civic leaders to address tough questions in health care reform, including how to pay for it.

Arizona Health Confusion

Joe Mathews — Sun, 21 Sep 2008 18:26:00 -0400

In drafting ballot initiatives, sponsors often face a choice. They can give their measure a better chance of winning by making it vague. A specific provision is easier to attack. But vague provisions often provoke legal challenges that block successful initiatives from taking effect. Such may be the case with Arizona's Prop 101, the ballot initiative designed to prevent the sort of health care reforms passed in Massachusetts and pursued in California. (Speciifically, the initiative bans the state from requiring people to get health care coverage, and would seem to bar a single-payer system). In this Arizona Republic story on the measure, critics suggest the initiative is so ambiguous that its real meaning might be decided in the courts.

And now the head of the state's indigent care system suggests the initiative, if passed, would force his department to close.

REFORM: Newt Gingrich on "Free Riders" and the Individual Mandate

Elizabeth Carpenter — Wed, 18 Jun 2008 16:05:00 -0400

If you were paying attention to your health care headlines recently, you might have doubled back for a second look at this caption: "Gingrich suggests insurance mandate for some." Huh? Is Newt Gingrich thinking seriously about a requirement to purchase health insurance? Is that a typo? No.

Let's recap. At an Alegent Health event in Omaha, the former Speaker of the House suggested that a strategy to combat high health care costs should include a requirement that people who earn more than $75,000 a year purchase insurance. According to an AP story, Gingrich said it was, " ‘fundamentally immoral' for a person who can afford insurance to save money by going without, then show up at an emergency room and demand free care."

This is in keeping with some Gingrich's past comments about individual responsibility in the context of health reform. In a June 2007 opinion piece in the Des Moines Register, he said:

Personal responsibility extends to the purchase of health insurance. Citizens should not be able to cheat their neighbors by not buying insurance, particularly when they can afford it, and expect others to pay for their care when they need it. However, an individual mandate is an acceptable option only when the larger health-care system has been fundamentally changed. It is unjust to require an individual to buy into a broken and dysfunctional system.

Here's the bottom line from some of our own work at New America on uncompensated care, "free riders," and the uninsured—16 percent of individuals who are uninsured are above 400 percent of the poverty line (about $80,000 a year for a family of four and $40,000 for an individual). They are the classic "free riders"—people who could likely afford insurance, but choose not to buy it. When the uninsured receive care that is not paid for, the insured pay higher premiums as a consequence. Hardly seems fair or efficient.

Gingrich appears to get this, as did fellow Republicans Arnold Schwarzenegger in California, and Mitt Romney in Massachusetts. Romney made the individual mandate central to his state reform proposal while he was governor of Massachusetts, and confronted this issue head on in a Wall Street Journal op-ed, during the heat of the health reform conversations in his state. "Some of my libertarian friends balk at what looks like an individual mandate," he wrote. "But remember, someone has to pay for the health care that must, by law, be provided: Either the individual pays or the taxpayers pay. A free ride on government is not libertarian."

The reality of an individual mandate (when coupled with subsidies so that insurance is affordable and market reforms so that coverage is accessible), is that it would not only address the "free rider" problem, but also serve as a tool to enhance insurance market competition. When combined with market reforms and subsidies, the mandate would help move insurers away from a business model that relies on marketing and underwriting and towards a strategy that involves competing for customers based on performance and price. This is a good thing...and something those in favor of market competition could get behind.

Thursday Round Up: A Look at a Petition Firm

Joe Mathews — Thu, 17 Apr 2008 18:59:00 -0400

DEPARTMENT OF MOON HOWLING: The Las Vegas Review & Journal takes a long look at one of the country's more important signature firms, National Voter Outreach and its CEO Rick Arnold. I've interviewed Arnold in his Carson City home, and found him to be one of the more thoughtful people in the petition trade, critical of its problems and clear-eyed about its limitations. This story is built heavily around criticism from the liberal/progressive Ballot Initiative Strategy Center, which is quick to lable signature gathering as corrupt (at least in cases where it opposes the cause in question). There is a "shocked, shocked" quality to this criticism. The signature gathering business has plenty of problem workers, many of them poorly trained folks who, for lifestyle reasons, have taken a job that usually pays them in cash. But BISC and other critics invariably propopse to criminalize the process of gathering signatures, as in Oklahoma. In supporting these restrictions, liberals are hurting themselves, by establishing precedents restricting political speech that can be used by their political opponents. And such restrictions don't stop direct democracy. They merely slow it down, adding to the costs (and thus the influence of interest groups) that progressives love to denounce. The more you regulate, the more firms like National Voter Outreach will benefit.

BLOOMIE AND ARNOLD: Mike Bloomberg, deepening his involvement in California initiative politics, hosts a fundraiser tonight on behalf of Gov. Schwarzenegger's redistricting ballot initiative. It's still gathering signatures on the street.

MICHIGAN POT: Medical marijuana initiative makes the ballot in Michigan after legislature declines to adopt the measure itself. (hat tip to Ballotpedia).

INDIVIDUAL MANDATE: A ballot initiative to establish an individual mandate for health care in Michigan is now circulating on the street.

NO ANIMAL CONFINEMENT MEASURE IN COLORADO: Colorado's ballot will be a little less crowded, as animal rights advocates drop their farm animal confinement measure. The state legislature passed legislation similar enough to satisfy the initiative's backers.

OAKLAND YOUTH: Here's an interesting report on a city of Oakland (Calif.) ballot initiative to double funding for a youth services program.

NEVADA NEUTRALITY: School superintendents, never fan of teachers' union, are staying out of a coming mega-ballot war in Nevada over the union's effort to raise taxes on gaming to generate more funds for education.

MAINE DEBATE: A referendum question has been submitted in Maine that would remove "sexual orientation" from human rights and discrimination law, and bar same-sex marriage and adoption by gay couples.

PARENTAL NOTIFICATION: Here's a description of another attempt, via California blalot initiative, to require parental notification for minors seeking abortions. A similar initiative went down in the 2005 special election. Over the past week, I found this initiative was a low priority for the state's signature gatherers. It's pay $1 or less a signature, half the price being paid by sponsors of redistricting, crime victims' rights, and alternative fuel measures.

FROM OVERSEAS: Croatians won't get to vote on their country's decision to join NATO.