It Matters: The Individual Mandate

It appears that, barring some action by the Courts, the Republican Tax “Reform” will become law. While there is much to criticize about this bill, including the massive transfer of wealth from the middle and working class to the rich, one item of particular note is the elimination of the individual mandate for health insurance. That is, the requirement that all people have coverage or pay a penalty.

As Margot Sanger-Katz, in her NYT piece (Upshot, 21 December 2017) notes, the individual mandate rule was an idea that came from the Heritage Foundation, a conservative think tank. It was made part of Governor Mitt Romney’s “RomneyCare Massachusetts” Healthcare Bill in 2006. It became part of the infrastructure of Obama’s Patient Protection and Affordable Care Act (ACA). This provision was based upon the precept that ensuring access to health insurance for all people – sick as well as well – for the same community price, with some variation based upon age, required the healthy to sign up as well as the sick.

The Heritage Foundation’s plan was simple and is summarized as follows:

Many states now require passengers in automobiles to wear seatbelts for their own protection. Many others require anybody driving a car to have liability insurance. But neither the federal government nor any state requires all households to protect themselves from the potentially catastrophic costs of a serious accident or illness. Under the Heritage plan, there would be such a requirement (Butler, Heritage Foundation #218, 1989).

To encourage people obtain insurance, the plan would use tax credits and the mandate; you must have insurance or there is a penalty. It is precisely this mandate – progeny of the Republican party – that Republicans are attempting to kill off.

What are the consequences of eliminating the often-hated ACA mandate? There is some unclarity about this. First of all, the author of the Heritage Foundation document referred to above – remember that this is a quite conservative group – comments that individuals, especially healthy ones, will put off obtaining health insurance because they are, well, healthy. The purpose of the mandate was to ensure that all people – healthy and sick – had health insurance. This would drive down the price of insurance by enlarging the pool of insured people. Overall this is a good thing.

But there is more. What happens when a healthy 25 year old, not on his parent’s insurance, is involved in an accident and suffers a severe brain injury? He was healthy until the moment that he wasn’t; as he was not mandated to obtain health insurance, he does not have coverage. So who pays for his care? We all do. As Butler states in the Heritage Foundation document:

“…Society does feel a moral obligation to insure that its citizens do not suffer from the unavailability of health care. But on the other hand, each household has the obligation, to the extent it is able, to avoid placing demands on society by protecting itself….”

It is precisely the individual mandate that provides a safety net for the individual as well as society. This young man will likely have his life saved by the physicians and nurses in the hospital; he will require significant rehabilitation after he is out of danger. The price for this will be in the hundred of thousands of dollars. If he is not covered by insurance – and we are talking here strictly about insurance. We could discuss a single payer “Medicare for All” system, but that is not the topic here – society at large will be forced to pay for this young man’s acute, emergent care. When he is ready for rehabilitation, there will be little or no money for this and he will not make as complete a recovery as would otherwise be possible.

Thus, eliminating the mandate – as has been done by the Republicans in their so-called tax reform bill – will hurt individuals as well as society, except for the wealthiest among us. Furthermore, because there will be fewer healthy people enrolling for insurance, the premium prices will climb – estimates are 10% per year – and even fewer people will be able to afford health insurance. Estimates are that 13 million more of us will be without health insurance within 10 years.

It was in 1927 when the first state – Massachusetts – made automobile insurance mandatory; in 2010 one of the last holdouts – Wisconsin – followed suit. Both Virginia and New Hampshire still do not require auto insurance. One hopes that it will not take another 90 years for us to see the wisdom of having all of our citizens covered by health insurance.

 

23 December, 2017

About AJ Layon

AJ Layon was, for 28 years, at the University of Florida College of Medicine, in the Division of Critical Care Medicine, in Gainesville, FL. For the past approximately 10 years, until September 2011, he was Professor and Chief of Critical Care Medicine at UF; In September of 2011 he became System Director of Critical Care Medicine in PA. While his interests are primarily related to health care, health care reform, and ethical issues, as a citizen of our United States and our world, he will occasionally opine on issues of our "time and destiny". You are welcome to respond to him at ajlayon@gmail.com.
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