Our view on medical care: Insurance mandate without teeth is no mandate at all

Lawmakers undermine effort to achieve universal health coverage.

For people who don’t have auto insurance, the penalties can be severe. In most states, their driver’s licenses can be revoked and their cars impounded. If they cause an accident, they can have their wages garnished to pay damages. This toughness is needed because an uninsured driver can impose enormous bills on other people and on society as a whole.

People without health insurance pose a similar problem. First and foremost, they endanger their own well-being. And when these “free riders” do need major medical care, as many inevitably do, their unpaid bills raise costs for everyone else.

Changing this — by creating an “individual mandate” to buy insurance, and providing subsidies to help lower income people purchase policies — is vital to repairing the nation’s dysfunctional health care system. It is also a requisite twin of another great goal in health care reform: a right to buy insurance without regard to a previous medical condition. With this new right, and without a mandate to buy insurance, people would simply wait until they get sick to buy insurance — an unworkable situation.

Unfortunately, like much else in the current debate, elected officials are having a hard time making tough choices. Witness them now undermining the individual mandate by setting the penalties for not having coverage way too low.

 

The worst example is the bill awaiting a vote in the Senate Finance Committee. With the adoption of an amendment by Sens. Charles Schumer, D-N.Y., and Olympia Snowe, R-Maine, the penalty was slashed to just $200 in 2014, slowly rising to $750 in 2017. (By comparison, the penalty in Massachusetts for not complying with that state’s mandate is $1,068.) Those whose income is less than 12.5 times the cost of the cheapest policy would be exempted entirely.

So let’s do the math. Someone seeking medical coverage goes to one of the new insurance exchanges and finds a policy for $2,500 a year. If he or she makes less than $31,250 annually, buying it would be strictly voluntary. People who make more than that could opt out for as little as $200.

It goes without saying that more than a few people would choose $200, or zero, over $2,500. This would be especially true of so-called young invincibles who don’t expect to get sick or injured.

A penalty that is too light, and too easy to avoid, would prompt millions of people to forgo coverage. The Congressional Budget Office estimates that merely raising the exemption from 10 times the cheapest policy to 12.5 times means 2 million more people — the equivalent of the populations of Detroit, San Francisco and Pittsburgh combined — would go uninsured.

Though the CBO said Wednesday that the amended bill would insure 29 million more people, the same as the original version, it appears to achieve this by adding more low-income people to Medicaid. The plan could do even better with real penalties for people who can afford to buy insurance but don’t.

To be fair, the individual mandate must be accompanied by affordable insurance policies, particularly for the young, who have lesser needs. Current proposals would have them pay extra to subsidize older people, and that is just plain wrong.

Fixing a broken health care system is a bit like getting in shape: no pain, no gain. A workable individual mandate is a key to achieving universal coverage and holding down costs. But a mandate with no teeth doesn’t deserve the name.

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