The U.S. Supreme court is expected to rule tomorrow on the constitutionality of imposing a mandate that everyone have health insurance. Everyone excludes immigrants. The big question is how much of the healthcare reform law will be kept in place if the individual mandate is removed.
Some facts. The individual mandate means two percent of the total population will have to buy insurance and not receive any federal assistance to pay for it. If these individuals choose not to purchase health insurance, then they must pay a penalty. Right now, there is nothing in the law that enforces the penalty. That’s right, for two percent of the population affected by the law, there is no difference should they choose to ignore the mandate.
Why was this needed in the law? So people do not wait until they are sick to buy insurance. Insurers must employ a modified form of community rating which restricts the factors that can be considered in determining an individual’s premium (e.g. tobacco use, age, geographical area, age). Requiring everyone to purchase insurance spreads the cost of the relatively few sick people over a large population of healthy people. Insurers can spread the added costs of ignoring pre-existing conditions and health status when granting coverage and setting premiums.
Note that the insurance companies have been quiet about the elimination of the individual mandate. That’s because if the mandate is excised and the rest of the mandate is left intact, it will make it difficult to set premiums.
What benefits have the Patient Protection and Affordable Care Act provided so far?
1. One provision requires that insurance cover children on their parents’ insurance until the age of 26. Nearly 3.1 million young adults received coverage through their parents insurance according to HHS. The report found that 74% of U.S. residents between the ages of 19 and 25 had health insurance compared to 64% before the federal provision was in place.
2. Preventive care is free for adults and children. This feature has been in effect since 2010. Prior to 2010, more than 50% of adults did not receive any key preventive services.
3. Lifetime maximum coverage is eliminated. The lifetime cap meant that total payments for an individual were limited by a dollar value, commonly $1 million. Once the limit was reached, the insurance companies did not have to pay for any more treatment or services. For those with serious illnesses or chronic disease, the cap could be reached very quickly.
4. A requirement already in effect is that insurers are required to spend at least 80% of their premium dollars on health-related costs from individuals and small businesses and 85% for large employers. If this is not met, the difference must be returned to the employers or individuals.
5. Policies cannot be rescinded unless the consumer was deliberately misleading in an application.
6. Premiums cannot be tied to health status and insurers must sell coverage to adults regardless of pre-existing health conditions and stop pegging premium rates to health status. Premiums have been known to be as much as three times higher for older individuals but under 65. This provision is set to take effect in 2014.
7. Individuals cannot be denied coverage because of preexisting conditions in 2014.
It’s easy to get misled by the politicians that the law infringes on individual rights. In reality, the decision before the court is based on a technicality. The question is whether this regulation is permissible under the Commerce Clause, which allows the federal government to regulate interstate activity. Health reform opponents say that the decision not to buy health insurance is economic inactivity, rather than activity, and therefore, not a behavior that is subject to regulation by the federal government. Health reform supporters argue that deciding not to purchase health insurance has an economic effect. For example, an individual without coverage may not have the money to pay for an emergency room visit, sticking hospitals or taxpayers with the bill.
Do we want to stay with a health care system that allows hard working ordinary people to go bankrupt because they are in an accident or become seriously ill? We don’t know when any of us could be hit with cancer or a brain tumor that causes ongoing treatment and care.
Is the health care reform law truly bad for us non-politicians? We need to think very carefully about keeping the benefits from the health care reform law. It will have a much bigger impact on our lives and bank accounts today and in the future than whoever wins the next political battle.