Tuesday, October 29, 2013

Overcoming discomfort with the ACA's Individual Mandate

Here's the thing about the individual mandate in the Affordable Care Act: Everyone loves to hate it.

The mandate is a critical part of the ACA. If you want to mandate that an insurer universally issue policies all applicants at similar prices regardless of pre-existing conditions,  you have to prevent healthy people from free-riding outside the system until they get sick. If only sick people purchase insurance, premiums may go up and a spiral out of control. By inducing healthy people into the insurance pool through a mandate to purchase health insurance, we can lower overall costs and keep insurance affordable for everyone.

And yes,  empirical research suggests that individual mandate will come in quite handy in persuading healthy people to buy insurance, as this New England Journal of Medicine study suggests.

Conservatives hate the mandate because they argue that it violates people's freedom not to buy a product. I suspect that many of them also object to it because it makes rich and healthy people ("makers", "job creators" "real Americans") pay insurance premiums that will benefit poorer and sicker people ("takers," "moochers" "the 47 percent.")

Or maybe they just hate it because a group of center-left reformers embraced it after Conservatives first introduced the idea

Some liberals in turn hate the mandate because they think makes people give money to evil insurance companies for lousy products. I also suspect that they find the mandate's narrative emphasis on "personal responsibility" a bit off-putting when they feel that the major idea is creating a universal right to health care.

For more, follow me below the jump.

I don't really have much to say to the Conservative point of attack beyond rejecting it, except for the fact that the logic in use here undermines the entire idea of insurance risk pools and ignores the spillover effects that sickness can have on other members of the community. (Repeat after me: No man is an island; now please get your damn vaccinations and get screened for STDs). I also emphasize that this view of the world pretty much kicks anyone with a health problem to the curb as a useless piece of junk, which not only is incredibly cruel, but also a tremendous waste of human talent. (I mean, this guy has probably run up a few doctor's bills in his time, but I'm kind of glad UK taxpayers chipped in to take care of those.)

But I have a more nuanced view of several left-of-center objections to the mandate -- though I disagree with them.

Perhaps the discomfort with "individual responsibility" as the narrative is understandable when we all feel that getting people the ability to have access to health insurance and health care is the primary purpose of a law. After all, it's not like poor people don't get health insurance because they are irresponsible; they don't get it because they can't afford it.

So I can forgive one of my friends (who I suspect does know better) who once argued that Obama should delay the individual mandate to compensate the little people for to delaying the employer mandate that presumably benefited the big shots. But if you don't like the narrative justifying a good policy, change the narrative -- don't abandon the policy.

The second reason many progressives hate the mandate -- or a least the major push-back I've gotten in correspondence -- is that it requires us to pay insurance companies money.

But here's the thing: U.S. law now greatly restricts private health insurance companies  under the ACA in ways that it didn't before.

It's true that restrictions aren't as tight as they are in other countries with an individual mandate, like Switzerland (which actually has a tougher mandate -- you pay a fine more expensive than the average policy, while in the United States you pay a small percentage of your income, capping out at roughly $600, which is considerably less than the annual cost of a policy.) However, the restrictions we have here will approximate that. Insurance companies can still make a profit on their product, but new regulations limit that profit in four ways. First, by mandating a medical loss ratio of 80 to 85 percent for insurers (meaning they have to spend at least that percentage of their premium revenue on reimbursing medical expenses) Second, insurers can't turn anyone away because of pre-existing conditions. Third, there are strict limits on their ability to charge differing classes of people different rates (for example, ending gender discrimination in rate setting). Finally, every package must have a standard set of included benefits -- including free preventative care and family planning services.

I'm not arguing that insurance companies have seen the light and don't want to screw over patients to make money. However, the ACA drastically curtails their ability to do so.  One goal for progressives should be to improve these measures  -- for example, creating federal mandates for tighter regulations in state insurance markets.

I'm also not arguing that the ACA is perfect, and I would like to see a public option or the ability to buy into Medicare or Medicaid -- which is another sort of public option -- in future reforms.

The final point I leave you with is that many progressives see a single-payer system as the ultimate goal. I would be quite happy with this outcome.  But remember, single-payer systems have the strongest individual mandate of all: everyone is required by law to pay the taxes that fund health spending.

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