Individual Mandate Without a Public Option: A Tax You Pay to Private Insurers in Exchange for Junk Plans
Without the option of a government-run insurance entity or extremely tight regulations to guarantee everyone has access to quality, cost effective health insurance, an individual mandate is both immoral and bad policy. If the Senate refuses to provide Americans with the guaranteed choice of decent health insurance policy, it must not mandate people buy insurance. No public option, no individual mandate.
There are two ways that industrialized nations have achieved universal health care. The simplest is for the government to collect money through general taxation and use that money to directly provide everyone in the country with basic health care or health insurance. This includes single payer and socialized health care systems like the UK, Canada, Sweden, and Denmark.
The other way to achieve universal health care is with a strong social contract between the government and the people. The government promises to ensure that everyone has access to decent, effective, affordable health insurance, and, in exchange, the people agree to accept a mandate that they must acquire health insurance. The government does this by placing serious regulations on insurance companies and the rest of the health care industry. The government ensures everyone can afford a good health insurance plan. Normally, most individual are provided with generous subsidies to help afford health insurance and/or employers are mandated to help their employees pay for health insurance. This is how countries like Germany, the Netherlands, and Switzerland run their health care systems.
The current Senate bill only creates a sham imitation of these systems. This bill completely fails to uphold the government’s end of this social contract, but would still force Americans to buy expensive, poorly regulated, junk insurance. Insurance policies would only be required to have an actuarial value of 60 percent, a shockingly low number. The insurance companies will not be banned from placing annual caps on benefits, and there is a massive loophole to get around an already too high “limit” on out-of-pocket cost. The end result is that having this “insurance” will not prevent Americans from bankruptcy if the get sick, nullifying the entire logic behind universal health insurance. For moral, political, policy, and economic reasons, progressives must oppose any government mandate to buy insurance as long as the government refuses to pass laws ensuring that every American actually has access to decent, affordable health insurance.
The Senate bill does not ensure that Americans get value from the health insurance they would be forced to buy. Insurance companies are not mandated to be non-profits. It lacks a strong minimum medical loss ratio that would force insurance companies to spend the majority of the money they take in through premiums on actual health care. There are no serious price controls of any form put on the insurance companies. The bill lacks a strong third-party review of claims denials. The bill also lacks a central reimbursement negotiator to make sure that insurance companies are not overpaying providers and passing on the cost to their customers.
The health insurance Americans are forced to purchase will not be affordable. Middle class families (making 300%-400% of FPL) will only get subsidies sufficient to make the premiums for the second cheapest insurance at the low quality silver level (70% actuarial) cost 10% of their income. That is only premiums and does not count co-pays, deductibles, non-covered procedures and medications, etc. These plans will have an annual out-of-pocket limit $12,000. If a family actually had a medical emergency, their health care spending could eat up over a third of their income, or go over the annual cap on benefit payments. This is not quality insurance, and will not truly protect people from financial ruin if they get sick. The bill will also allow insurance companies to charge older Americans up to three times as much as younger Americans.
One of my biggest problems with the Senate bill is that it does too little to guaranty everyone gets quality health insurance. Tax credits are based on the very low quality 70% actuarial plans, and insurance companies would be allowed to sell super-junk 60% actuarial plans, and even worse “catastrophic plans” with actuarial values likely to be below 50%.
The bill does not mandate precisely defined quality insurance packages with set co-pays, deductibles, and benefits. Instead, it gives insurance companies huge latitude to structure convoluted plans in a manner impossible to understand and designed to game the system. The gaming will be made even worse given the weakness of the risk adjustment mechanisms. Without precisely defined insurance packages, strong, third-party review of claim denial, and a strong risk adjustment mechanism, there is no way the insurance on these new exchanges will be good.
Finally, by removing the workable public option and Medicare buy-in, the Democrats stripped the last guaranty of quality. The public option would have ensured that everyone on the exchange would have access to at least one decent plan that would put the public interest above corporate profits. Now there is zero promise that the expensive insurance the government is forcing people to buy will be of decent quality or cost effective.
As a pragmatic progressive, I can reluctantly accept the need for an individual mandate if (and only if) the government does its job of promising everyone access to decent, effective, affordable health insurance. This bill completely fails to hold up the government duties in this bargain. The insurance this bill will force Americans to buy will be poorly regulated, extremely expensive, junk insurance. It will not stop financial ruin due to illness or arrest the out of control growth in our health care spending. This will be expanded “coverage,” but, for the most part, coverage in name only. The individual mandate in this bill is nothing more than government-enforced private taxation on behalf of large, for-profit corporations. It would be just one more step toward corporate serfdom.
There are some parts of the bill that will help many Americans (Medicaid expansion, guaranteed issue, even the weak community rating) but as long as the bill does not guarantee access to at least one decent insurance plan, any form of an individual mandate is morally reprehensible. Obama campaigned against the individual mandate and the provisions that would have guaranteed access to decent, affordable health insurance where removed to win over Republicans Olympia Snowe and Susan Collins, both of whom oppose the individual mandate. Places like Vermont have successfully implemented guaranteed issue and stronger community rating laws without the need for an individual mandate. There is zero excuse for keeping the individual mandate in this bill unless the Democrats have cut a deal to sell the middle class into corporate servitude.
Without the public option (or similar powerful tools to guarantee access to decent affordable insurance) passing a bill with any type of an individual mandate would be a moral and political tragedy for Democrats. Progressives should fight with any means available to stop Democrats from imposing a private tax that would use the IRS to steal huge amounts of money from the pockets of hard working middle class Americans, and force them to hand it over to poorly regulated, massive, for-profit health insurance corporations in exchange for near-worthless junk insurance.