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Opponents of a health insurance mandate mobilize
Both healthcare proposals approved by Congress require that all Americans
get health insurance. That's now under fire from liberals, Republicans and even
some in the insurance industry.
By James Oliphant
January 2, 2010
Reporting from Washington
If there is one thing in the proposed congressional healthcare overhaul that
sets Michael Cannon's libertarian teeth on edge, it's the requirement that all
Americans get health insurance.
"The federal government does not have the
power to force you to purchase a private product," said Cannon, a health policy
analyst at the Cato Institute, a free-market think tank in
Washington.
But with Congress poised to do just that, the mandate for
near-universal coverage is generating opposition not only from libertarians like
Cannon, who object to the guiding hand of government regulation in almost any
form, but from some liberals -- and even from some members of the insurance
industry, which stands to gain millions of customers.
Both the House and
Senate versions of the healthcare revamp contain a requirement that everyone
have health insurance, through a job, the government or the private market.
In theory, the justification seems simple: A large number of people pay
relatively modest premiums, creating a pool of money big enough to take care of
those who need help.
Having people of all ages participate is especially
important with healthcare, analysts note, because the major medical problems
that result in big claims are found disproportionately in middle-aged and older
Americans. If younger, healthier people go without insurance, premiums for the
others would be driven higher.
But even as right-wing critics talk of
legal challenges, critics on the left complain that Americans will be locked
into buying a product that threatens to become ever more expensive -- especially
if, as seems likely, the final bill does not contain a government-run insurance
program to compete with private firms, the so-called public option.
"We'd
like to see the individual mandate stripped," said Jim Dean, chairman of the
liberal Democracy for America, which was founded by his brother, former Vermont
Gov. Howard Dean.
The mandate "was fair given the presence of a
government entity that could provide competition and control the cost," Jim Dean
said. "It's not fair if people are required to buy insurance from the same
insurance industry that caused this problem in the first place."
Mainstream Republicans also have adopted the no-mandate war cry, led by
a group of more than a dozen state attorneys general who are exploring whether
the mandate is unconstitutional.
"It's a tax on living," said Florida
Atty. Gen. Bill McCollum. He drew a distinction from the requirement that people
buy auto insurance: Drivers make a choice to own a car.
The insurance
industry, meantime, has a different complaint: that the penalty for failing to
buy insurance is too mild. That could result in young, healthy people choosing
to pay a relatively small tax penalty rather than buy insurance.
"We
think there's more that [the legislation] needs to do," said Robert Zirkelbach,
spokesman for America's Health Insurance Plans. "There's still a strong
incentive for people to wait until they are sick to purchase
insurance."
That incentive exists, ironically, because of another
provision in the legislation -- that insurers treat those with preexisting
medical conditions the same as everyone else, and end practices that deny
coverage to patients in other ways.
Once insurance companies must sell
policies to almost all comers, "the incentive is to pay the penalty until you
need the insurance -- and then buy it," said Robert Book, a health economist
with the Heritage Foundation. "You are likely to have more people go uninsured
because now it's less risky to be uninsured."
Book and other critics warn
that if young, healthy people opt out of the individual market in large numbers,
those who buy insurance will tend to be sicker. That will cause premiums to
increase, which, in turn, will prompt more young people to forego insurance and
pay the penalty.
"It's a realistic concern," said Rick Weissenstein, a
healthcare analyst with the Washington Research Group. The legislation allows
insurers to charge older people only two or three times more than younger
consumers, he said, which also is likely to drive up prices for the
young.
"Over time, the incentive will be for older, sicker folks to take
the insurance," he said. "It's not going to make it cheaper for younger people,
that's for sure."
Under the Senate bill, all a person would have to do is
pay $750 per year or 2% of household income, whichever is greater, to defy the
mandate. The House penalty is slightly higher. (This and other differences will
be worked out by House and Senate negotiators.)
But defenders of the
legislation say fears of an ineffective mandate are overblown.
Linda
Blumberg, a researcher with the Urban Institute, said much of the public's
resistance stemmed from sketchy details about the new insurance exchanges, which
would be established so that people without job-related insurance could buy
coverage. People who earn just over 100% above the federal poverty line would
become eligible for Medicaid -- and those earning up to 400% of the poverty line
would qualify for federal subsidies to help defray the cost of
insurance.
"There's a lack of information about what they're going to pay
and what they're going to get," Blumberg said.
She cited Massachusetts as
a success story. The state enacted its own individual health insurance mandate
in 2006. By the end of 2008, about 96% of residents were insured. The state's
penalty in 2008 for violating its mandate exceeded $1,000, however -- more than
the fee in the Senate bill.
More Massachusetts employers were offering
coverage because, she said, workers were actively seeking jobs with health
coverage to comply with the mandate.
"Once somebody is required to do
something for the first time, it creates more of a financial pressure for
employers and workers to work out a deal," she said.
joliphant@latimes.com
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