Tuesday, October 13, 2009

Why Are Liberals Rushing to Defend Watered-Down "Individual Mandate"?

For years, many liberal healthcare reform proposals have included an individual mandate. The individual mandate could help the US achieve "univeral coverage" and lower costs by eliminating the problem care for uninsured Americans.

Also, univeral coverage could help justify some insurance reforms -- such as mandatory coverage of "pre-existing conditions" and acceptance of all applicants, regardless of health, age, sex, etc. Without mandatory coverage, healthy individuals could "game" the system and only seek health insurance once they discover they have a chronic health condition.

In exchange for covering all individuals, insurance companies would receive added revenue generated by a larger pool of insured individuals. Although Democrats have promised to deliver mandated coverage, an amendment to the Senate Finance Committee bill would severely weaken the provision.

The News Hour has published an article that details the battle over the individual mandate:

Under the bill, individuals and families will be required to buy health insurance, and will pay a penalty if they don't. In the original version of the bill, that penalty topped out at $950 per family; in the new version the fee won't exceed $750.

Also, under the amendment the penalties do not start until 2014. That year, the top penalty will be $450 and it will gradually rise to $750 by 2017.

The amendment also expanded by an estimated 2 million the number of people who would be granted a "hardship waiver" exemption. Under the original bill, anyone whose health coverage would cost more than 10 percent of their income would receive the waiver; the amendment lowered that threshold to 8 percent.

Senator Charles Schumer and Senator Olympia Snowe co-sponsored the amendment. They did so because the legislation does not provide sufficient money to subsidize the purchase of health insurance for people who lack the money to do so on their own.

What's Going on Here?
The White House and many liberals have rightfully blasted the flawed insurance industry report on healthcare reform. The weakening of the mandate, however, undermines the terms of reform that liberals have touted for years.

Liberals, however, have rebutted the insurance industry's concern that without the mandate, too much gaming will occur. But they are using White House analysis that suddenly portrays the mandate as insignificant.

The political scrambling probably relates to the lack of courage among moderate Democrats -- including Obama -- regarding the public plan and mandatory coverage. A public plan could potentially reduce costs and make mandatory coverage more affordable. Moderates, however, do not want the public plan option, and many of them are reluctant about mandatory coverage. Mandating coverage without the public option or a vigorous subsidy would make insurance cost-prohibitive for most uninsured people. Providing subsidies to uninsured people without cost reductions is highly expensive -- and mirrors the Republican approach to the issue.

Democrats appear to be caving on the public plan and mandatory coverage, but they are still forcing the insurance industry to offer coverage regardless of the insured's health status. This has resulted in an exchange of criticism from liberals and the insurance industry.

The insurance industry, however, cannot complain too much, because it opposes the cost-reducing public plan. Despite the insurance industry's "unclean hands," I am disturbed that liberals are primarily dismissing the evisceration of mandated coverage as insignificant -- after making it a centerpiece of reform proposals. On a final note, Obama opposed mandatory universal coverage during the presidential campaign -- a point that distinguished him from Hillary Clinton.


The Gaucho Politico said...

i think part of the reason you see softening on the issue of the mandate is that there is very little confidence that the end result bill will do what it is supposed to. by that i mean that it will most likely not provide affordable heath care for people. because it looks like people were going to be forced to buy crap, liberals are backing off the mandate. its a very bad idea to force the public to buy crap they dont like. if the public were really getting a choice from this bill the mandate would be stronger.

Darren Lenard Hutchinson said...

GP: I can accept this. I guess I: 1. want real reform; 2. can see the insurance company perspective of forcing acceptance of everyone without preventing gaming.

Melanie said...

Americans don't like to be told what to do, at least not directly. A mandate, regardless of how much sense it might make, does not sit well with us.

I am in HR and work primarily with people in the UK. When they want to know how to do something, they have a nice website that tells them exactly what to do, what an employee gets...

Here in the US, you check the feds, the state, the county, the city...and none of them will usually tell you what to do. They will only tell you some things you can't do and some parameters you can do things within. We avoid mandates like the plague.

Plus, it really chaps my ass to be required to give those insurance company shmucks any more money.

Darren Lenard Hutchinson said...

Well, Melanie, the government could simply raise taxes and provide universal coverage. People who already have insurance could get some type of refund. People who don't -- would not.

Melanie said...

I'm in favor of universal coverage (although perhaps my comment indicated otherwise). I'm afraid the half assed attempts by dems to avoid freaking republicans out with universal coverage may leave us much worse off.

Melanie said...

I should actually add that the dems attempts are more likely about protecting the insurance companies than freaking out republicans.

Clinton said...

Does it occur to you critics of insurance companies that they have investors? Including union pension funds? Where did you get your K-12 education, anyway?

Darren Lenard Hutchinson said...

The fact that companies have investors does not insulate them from regulation or from public criticism. Enron had investors too!

Also, please do not make disparaging remarks about other commenters.

Real Time Analytics