Wednesday, October 9, 2013

Life's not fair: why we can't delay the individual mandate

When liberals accuse conservatives of being “heartless,” they (we) should try to bear in mind that just about everybody believes it is wrong to deny health insurance coverage to a person with a pre-existing condition. Most Americans don’t think insurance companies should be allowed to discriminate against people based on things they mostly cannot control.

  • 89% total: 63% of respondents said ending pre-existing condition discrimination "absolutely must" be part of a healthcare reform law, another 26% said they "would prefer" it. September 2009
  • 64% say they support the provision that prevents insurance companies from denying coverage for people with pre-existing conditions. December 2010
  • 0% of those who said they wanted all or part of the ACA repealed indicated that they specifically wanted coverage for pre-existing conditions removed (see page 19). January 2011
  • 82% of respondents favored banning insurance companies from denying coverage to people with pre-existing conditions. June 2012
A Kaiser Family Foundation health tracking poll found that half of Americans say they have someone in their household who has a pre-existing condition. Of those, a fifth say they've had trouble getting coverage. It's not surprising that most Americans, regardless of political or even religious ideology, are fair-minded about the issue. They don’t think people should be turned down by insurance companies just because they already have arthritis or are pregnant or have been a victim of domestic abuse.

Insurance is a bit like small scale opt-in communism, sold as a private product. We could bastardize Marx and describe it thus: "From each according to their liability, to each according to their need." People with pre-existing conditions have greater needs, which drives up the total cost of care for all members of the pool, which drives up premiums for healthier members. If we don't want everyone's existing premiums to skyrocket when those with pre-existing conditions are added to the pool, we need something to offset the cost of their greater risk (ie more expensive care).

Most developed countries have solved this dilemma by having a public or semi-public healthcare system (single payer or two-tier, both of which come with their own set of potential issues). Public healthcare of that magnitude is not especially popular in the United States. Its supporters are substantial within the electorate, but not enough to get their agenda through a system which has notoriously difficult barriers to major legislation. Remember that even with the Presidency and super-majorities in both houses of Congress, Democrats still failed to enact their pet healthcare project; a government/public option, and instead passed a reform bill based partly on an earlier conservative plan. To enact any reforms at all, public measures for inclusion would have to be balanced with something else to support our private healthcare industry, which makes up about 18% of our GDP and would hurt us grievously if it were to disappear or take a body blow. It is not surprising then, that America’s recent healthcare reform was essentially a public-private hybrid solution.

Here's the idea: people with pre-existing conditions must be sold health insurance. To keep premiums from rising for those of us who already have insurance and to prevent people from gaming the system by only purchasing health insurance when they're already sick or injured, the government will require everyone to purchase health insurance or pay a tax penalty. The government will use tax penalty revenues from those who could afford health insurance but will not buy it to help offset the costs of subsidizing insurance plans for lower-income Americans through the exchanges. If it works, rates will not rise significantly when the higher risk people are added to the pool. If we're lucky, the big influx of healthier, lower risk people into the insurance market (whether they qualify for a subsidy or not) will help lower premiums for everyone. It should also lower the number of citizens who misuse the emergency care mandate established in the mid-80s which could also lower premiums and would definitely drive down the costs of Emergency Medicaid.

If nearly all of us want to make it illegal for insurance companies to discriminate against people with pre-existing conditions without making existing premiums increase as a result, but not enough of us want a single payer or two tier system (socialism!), and most of us don't want to cripple or seriously harm an industry which makes up about a sixth of our GDP: any reform which ends discrimination against people with pre-existing conditions by allowing them to purchase the same insurance as everyone else must include an individual mandate of some kind. Otherwise we might as well not bother.

Make no mistake: the House Republicans' goal is to yank down a load bearing wall by any means possible and then blame the contractors for faulty construction as the law continues to go into effect without a provision it absolutely requires to succeed. Ending pre-existing condition discrimination without the individual mandate will not only decimate the ACA, it will all but guarantee massive premium hikes for those of us who are responsible enough and/or lucky enough to have insurance in the first place.

Delaying the individual mandate creates a dreaded "unfunded mandate"the government will not take part of in the revenue expected to pay for low income insurance exchange subsidies or other government-funded aspects of the law. The provisions of the law intended to balance each other out fiscally will be out of whack.

Many Americans believe that delaying the individual mandate is "only fair" because they've heard that the President gave a substantial break to the business community. Like most talking points, this is a bit misleading. The issue of "fairness" is twofold. First, many people believe that if businesses are given a one year delay of their mandate to provide insurance, individuals should be granted the same delay. The thing is, the employer mandate is not the hinge upon which the entire ACA turns (which is why the extension was granted after businesses demonstrated that they were working towards compliance in good faith), but again: the individual mandate is absolutely integral to the success of the law. Without enforcement (via penalty) of the individual mandate, the ACA will not work. Think of it this way: the ACA is a house which can function without internet for a while if it must, but everything screeches to a halt if the power goes out.

The second issue of "fairness" is the belief among many Americans that certain businesses were made exempt from participation in the law at all. It is true that some businesses have been granted waivers but these employers did not receive a waiver for a full exemption from the employer mandateThe administration has granted temporary waivers to about 1231 employers, which represent fewer than two hundredths of one percent of the total number of employers in the country. Here's where the GOP's claims of "fairness" fall apart:  These 1231 employers received a temporary waiver for compliance with new rules about annual and lifetime limits on coverage. Read more in this bit of testimony to the House Oversight Committee regarding the waivers ('The Bridge to 2014' section especially).

The ACA may or may not fail on its own merits. It will fail in its first year if this Tea Party-inspired congressional meltdown manages to delay the individual mandate, which is the lynchpin holding together many popular provisions of the law, including mandatory coverage of those with pre-existing conditions. Republicans say we need to give people a chance to "see how it works," but the thing is: the newly enacted provisions of the law won't work without the individual mandate. (Catch-22, much?) Louie Gohmert might think this all makes perfect sense, but Speaker Boehner and plenty of other House Republicans ought to know better.

Republicans demanded a massive sacrificial offering last week when they proposed a delay of the individual mandate in exchange for funding the government at Paul Ryan budget levels. They were not asking for a small, reasonable budget concession as has happened in the past. They were not asking for something "fair" to reflect the drop-in-the-ocean number of businesses which have received temporary waivers for compliance with new annual and lifetime limit rules. They were not exercising their "power of the purse." They were asking Democrats to deliberately sabotage their signature legislative achievement even though Republicans lost all three popular votes last election: for the presidency, the Senate, and the House (they hold the House thanks only to creative gerrymandering, but that's a tale for another time).

Egged on by the Tea Party, House Republicans want to force Democrats to eject the ACA's warp coreafter which they will almost assuredly criticize it for not being able to travel at light speed: "We told you it would fail!"

Some Republicans say failing to fund the government and using the debt limit as leverage is "no big deal."

If you were trying to make a group sabotage something they value and take great pride in (warts and all), would you offer (more accurately, withhold) something relatively worthless in return? I doubt it.


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