I’ve watched with great interest over the last several weeks as the idea of an individual mandate for health insurance took shape. Once the possibility started getting seriously tossed around, lawmakers began looking for ways to enforce such a mandate. The solution that was reached was a financial penalty, originally proposed to be up to $3800 for a family that opted to not carry health insurance. Over the last few weeks that penalty slowly eroded – first cut in half to $1900, and is now looking like it will be even lower. In addition, the penalty might not even begin until 2014 (a year after the rest of the health care reforms take place), and will slowly phase in until it reaches a maximum of $750 per adult in 2017. The first year, the penalty would be only $200.
I’m not an economist, or a lawmaker, but it seems obvious to me that if we want pre-existing conditions to be covered, everyone has to be paying into the health insurance system. It’s human nature to try to save money wherever possible, and I think it’s naive to assume that people won’t just sign up for health insurance when they start feeling like they might have something wrong with them – and then drop it again once the problem is treated. There is no way that sort of scenario would be sustainable long term.
Medical care is expensive. Sometimes astronomically so. And the only way that health insurance can work is for lots of people to be paying into the system while they are healthy, in order to cover the claims of people who are sick. It makes sense that if all of the healthy people are paying premiums, health insurance companies will be able to afford to pay claims for pre-existing conditions. But without expanding the pool of insureds to include all of the healthy people, covering pre-existing conditions will involve large rate increases for people who do carry health insurance. Which will in turn lead to more people choosing to go without health insurance. And the cycle will continue until the only people paying for health insurance are the ones who are actively using it. The long term prospects of such a system aren’t hard to guess.
In countries where universal health care is provided as a government service, it’s paid for by taxation. Thus, everyone pays for it, regardless of their health status. An individual mandate for health insurance would effectively transfer the same type of all-in funding to our health care system, but would retain the private nature of our health care and health insurance, and would allow consumers to choose their own health insurance. It would also mean that pre-existing conditions would no longer be a road block for people shopping for health insurance.
I’m disappointed that the individual mandate has been eroded so much. I think that without it, the likelihood of keeping premiums affordable and still covering pre-existing conditions is slim.