Colorado Attorney General John Suthers is joining with several other attorneys general who are challenging the legality of the requirement that all Americans carry health insurance, which is part of the bill that President Obama signed into law earlier this week. Basically, they’re saying that the federal government doesn’t have a constitutional right to compel citizens to take part in any specific market – including health insurance.
I do understand their point, but I’m curious as to what solution they would pose to the seemingly insurmountable problem presented by doing away with medical underwriting on health insurance policies (which means that pre-existing conditions would no longer prevent a person from getting comprehensive health insurance) while allowing people to opt in and out of the health insurance system at will.
If people are given a choice about carrying health insurance, but also know that they have to be accepted for coverage if and when they apply, where is the incentive for them to continue paying into the health insurance system when they are healthy and not in need of extensive medical care? How is there any realistic way to keep premiums remotely affordable in that scenario? As it is, I’m highly skeptical that the “mandate” part of the reform bill will truly be effective at compelling people to carry health insurance against their will, since the penalties are so low. Without any penalty at all, I can’t see the reformed system being all that sustainable.
There are two obvious problems that I see with allowing people to go uninsured under the reformed health care system. First is what happens when a person who has chosen to go without health insurance becomes ill. Without pre-existing conditions limitations, the person can simply apply for a new health insurance policy and wait for it to become effective before seeing a doctor. If it turns out that the person has cancer or heart disease or diabetes or some other significant chronic illness, the health insurance company would be on the hook for a huge medical bill right from the start. This does not present a good scenario in terms of what it would do to premiums for all of the rest of the insureds (many of whom may have been diligently paying premiums for years, even while perfectly healthy).
The second major problem that I see is emergency situations and injuries. An uninsured person who has a sudden heart attack or gets hit by a bus isn’t going to have time to apply for a health insurance policy before seeking medical care. Chances are, the person will be transported to an emergency room and be up to his neck in medical bills before the lack of health insurance is even discovered. What happens then? If the person is unusually wealthy, he can just pay his bill and carry on. But most Americans don’t have buckets of money stashed away somewhere to pay for a medical emergency. And a serious medical condition without health insurance is often a recipe for bankruptcy.
Both of these scenarios – a person opting to get health insurance only after starting to feel ill, and a person who is uninsured and faced with a sudden emergency medical bill – will likely end up passing huge medical costs on to the insured portion of the population.
{ 3 comments… read them below or add one }
While I have personally supported the individual mandate in th epast, I am sympathetic to the constitutional argument. Assuming thta this argument prevails, what proctions do carriers have to counteract adverse selection? Here are two that have been tried and have worked.
1. Institute a premium adjustment plan similar to Medicare Part D pricing. Charge applicants who have been without insurance 1% addtional premium for each month they’ve been without coverage up to soem maximum amount (25%?)
2. Revisit the nasy old subject of pre-existing condiitons. Accept all comers but require a 1 month wait on pre-exisiting condiitons for each otn without coverage (maximum 6 mos.?)
I know that legislation has to be written to appeal to the average 12 year old, however, these two remedies might provide some financial stability to carriers if the individual mandate is found to be unconstitutional.
Jim,
I agree that both of those options are good alternatives to the individual mandate. Personally, I like the first options, although I imagine that we’d have to have a relatively high cap on the increased premium that can be charged (a person who has chosen to go without health insurance for five years and then gets diagnosed with cancer shouldn’t be able to get health insurance by paying only 25% more than the people who have been paying for policies for all those years, just as an example).
The second option is great in theory, but it seems like it could easily be abused… if a person feels ill but doesn’t seek treatment until after securing health insurance, who is to say that the condition is “pre-existing”? Technically, it is, but with no record of the problem in the patient’s medical file, there would be no realistic way of imposing a waiting period.
Thanks for weighing in. I’m sure this will be an interesting legal battle to watch, as each side has a good case, and it’s easy to see arguments for both of them.
The primary reason people give for not purchasing insurance is affordability.
The government steps in and says, “Okay, we’ll subsidize you, so affordability will not be an issue anymore.”
But, the policies to be available on the exchange seem to be plans similar to what is provided now, only with more comprehensive coverage.
Wouldn’t the plans be even more expensive?
If we are going to mandate that people buy insurance, we should first look at plans that people can afford, without subsidizing up to $88,000 of income.
The subsidy should be a last resort, not a first choice.
Don Levit
Don Levit