Don’t Delay Health Reform’s Individual Mandate

The House plans to vote tomorrow on a one-year delay of the health reform requirement that individuals have health coverage or face a penalty.  Given the many misleading statements that some critics have made about the “individual mandate,” it’s worth repeating some basic facts:

• The vast majority of Americans already satisfy the mandate. Most already have health insurance — through their jobs or through a program like Medicare, Medicaid, or the Children’s Health Insurance Program (CHIP).  They simply will show on their tax forms that they have coverage.  Many others, including those who don’t have access to affordable coverage, will be exempt.

  The Urban Institute estimates that only 7 percent of people under age 65 will have to buy coverage or face a penalty.  The Congressional Budget Office estimates that less than 2 percent of the population will actually pay the penalty in 2016.

• Most uninsured Americans want coverage. Many uninsured people don’t have a job that provides insurance and either can’t afford to buy it in the individual market or would get rejected by insurance companies because they have (or have had) serious health problems.  Only 11 percent of non-elderly adults without coverage don’t have health insurance mainly because they don’t think they need it, according to a recent Kaiser Family Foundation poll.

• The uninsured will get substantial help buying coverage. People with incomes between 100 percent and 400 percent of the poverty line will receive subsidies to help them buy coverage through the new health insurance exchanges.  Those with incomes below 250 percent of the poverty line will also get help with deductibles and other cost-sharing charges.  (States also can expand their Medicaid programs to all near-poor adults and about half will do so in 2014.)

• The mandate is critical to reforming the flawed individual insurance market. Starting in 2014, health reform bans many of insurance companies’ most egregious practices — like denying coverage to people with pre-existing conditions like cancer or diabetes or charging sick people higher premiums.

  But it’s impossible to end those practices unless almost everyone is covered.  That’s because without an individual mandate, these reforms would make health care coverage less affordable by enabling older and sicker people (who largely have been shut out of the individual insurance market) to buy coverage while allowing healthier uninsured people to wait until they got sick to buy it.  The pool of people with coverage would get older and sicker, on average, so premiums would go up.  These premium hikes would lead some healthier people to cancel their coverage, which would raise premiums still higher, and so on.

  As the Urban Institute concludes, the individual mandate will lead to “lower premiums and more stable insurance markets.”

• Millions more people would remain uninsured without the mandate. The Urban Institute projects that nearly 14 million more non-elderly people would be uninsured without the mandate than with the mandate.  (This estimate assumes that all states take up health reform’s Medicaid expansion, although some states have decided not to do so for now.)  Fewer uninsured people eligible for subsidized coverage through the exchanges, Medicaid/CHIP, and job-based coverage would end up enrolling.

• The small number of uninsured people who don’t want coverage will simply pay a modest fee in 2014. That makes sense, given the burden that the uninsured place on taxpayers and people with health insurance, who help pick up the tab when an uninsured person receives health care (such as at an emergency room).