Republicans Struggle to Replace Obamacare’s Individual Mandate

GOP alternatives to the mandate will likely not be as effective in driving healthy people to sign up, some experts say.

Senate GOP leaders have a hard road ahead on health care.
AP Photo/J. Scott Applewhite
Erin Durkin
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Erin Durkin
May 9, 2017, 8 p.m.

Con­ser­vat­ives have spent years de­cry­ing the Af­ford­able Care Act’s in­di­vidu­al man­date as a threat to free­dom it­self. But they’re hav­ing a hard time com­ing up with something bet­ter.

The man­date is Obama­care’s un­pleas­ant linch­pin—crit­ic­ally im­port­ant to mak­ing the law work as in­ten­ded, yet deeply and con­sist­ently un­pop­u­lar. Re­pub­lic­ans have railed against the policy for years, but it’s prov­ing to be a dif­fi­cult stum­bling block as their re­peal-and-re­place ef­fort grows in­creas­ingly ser­i­ous.

GOP law­makers “boxed them­selves in a corner” by fram­ing the in­di­vidu­al man­date as “pretty hor­rible,” said Wendy Weller, health policy as­so­ci­ate pro­fess­or at the Uni­versity at Al­bany.

“I think it’s just hard to come up with something that meets their ideo­lo­gic­al agenda and ac­tu­ally works to in­centiv­ize people to pur­chase in­sur­ance,” she said.

The man­date was de­signed to force healthy people in­to the sys­tem, to off­set the cost of guar­an­tee­ing cov­er­age to sick­er, more ex­pens­ive pa­tients. Re­peal­ing the policy would cause mil­lions few­er people to buy in­sur­ance, caus­ing premi­ums to be 15 to 20 per­cent high­er in the first two years, ac­cord­ing to the Con­gres­sion­al Budget Of­fice.

Re­pub­lic­ans have tried out two al­tern­at­ives. The first was a 30 per­cent sur­charge people would pay to their in­sur­ance com­pan­ies if they dropped their cov­er­age. But that would de­ter mil­lions of healthy people from get­ting cov­er­age, CBO said, leav­ing in­surers with a sick­er risk pool.

Last-minute changes to the Amer­ic­an Health Care Act laid out an­oth­er op­tion states could ad­opt to en­cour­age con­tinu­ous cov­er­age: a waiver al­low­ing in­sur­ance com­pan­ies to charge con­sumers high­er premi­ums be­cause of a preex­ist­ing con­di­tion, if they had let their cov­er­age lapse. States could ob­tain a waiver only if they are op­er­at­ing some form of a risk-mit­ig­a­tion pro­gram or par­ti­cip­at­ing in a fed­er­al in­vis­ible risk-shar­ing pro­gram.

The amend­ment brought the House Free­dom Caucus on board with the le­gis­la­tion, but it has also sparked polit­ic­al con­tro­versy: While the in­di­vidu­al man­date is among Obama­care’s least pop­u­lar pro­vi­sions, its pro­tec­tions for people with preex­ist­ing con­di­tions are its most pop­u­lar. AARP and the Amer­ic­an Hos­pit­al As­so­ci­ation have also op­posed the waiver pro­pos­al.

Timothy Jost, a law pro­fess­or at Wash­ing­ton and Lee Uni­versity School of Law, said the best op­tion would be a stronger, rig­or­ously en­forced in­di­vidu­al man­date.

“It seems to me that either you pen­al­ize people for not hav­ing cov­er­age while they don’t have cov­er­age—i.e. an in­di­vidu­al man­date—or you pen­al­ize them when they try to get cov­er­age—by a per­cent­age premi­um in­crease, sub­ject­ing them to health-status un­der­writ­ing, or lock­ing them out of cov­er­age for a time,” Jost said. “Any kind of pen­alty that ap­plies when a per­son ap­plies for cov­er­age, however, pen­al­izes people who are sick but not people who are healthy. We want healthy people to get covered, which is why Con­gress ad­op­ted an in­di­vidu­al man­date.”

Cori Uc­cello, seni­or health fel­low at the Amer­ic­an Academy of Ac­tu­ar­ies, said the waiver to al­low med­ic­al un­der­writ­ing wouldn’t de­ter as many healthy people as the premi­um sur­charge, be­cause those con­sumers wouldn’t have to pay a high­er price.

She still ques­tioned, however, wheth­er it would drive healthy people to buy in­sur­ance.

“I’m not sure, if they put it off in the first place, why down the road they would pur­chase it,” she said. “I think the in­di­vidu­al man­date would still be stronger than this kind of con­tinu­ous cov­er­age mech­an­ism.”

Weller said she didn’t think either pro­pos­al would be as strong as the in­di­vidu­al man­date, al­though she noted the man­date’s pen­alty is re­l­at­ively small.

Al­low­ing in­surers to charge more based on preex­ist­ing con­di­tions would be a stronger in­cent­ive for sick people than healthy ones, said Larry Levitt, seni­or vice pres­id­ent for spe­cial ini­ti­at­ives at the Kais­er Fam­ily Found­a­tion.

“This in­cent­ive to main­tain con­tinu­ous cov­er­age re­quires foresight on the part of people in or­der to en­cour­age en­roll­ment,” Levitt said, adding that it would be in­ev­it­ably weak­er than the in­di­vidu­al man­date.

But Ed­mund Haislmaier, an ex­pert in health care policy and mar­kets at the Her­it­age Found­a­tion, said the threat of high­er premi­ums would be a stronger in­cent­ive than the 30 per­cent sur­charge or the in­di­vidu­al man­date, be­cause “the down­side price for gambling in that scen­ario is high­er.”

Sally Pipes, pres­id­ent and CEO of the Pa­cific Re­search In­sti­tute, said ad­di­tion­al changes, such as loosen­ing Obama­care’s es­sen­tial health be­ne­fits, could help lower premi­ums and en­cour­age young­er people to get covered. She wor­ried, however, that mak­ing such changes through state waivers might not be per­man­ent, as a fu­ture ad­min­is­tra­tion could un­der­mine that strategy.

A GOP aide said the primary goal of the waiver pro­cess is to help lower premi­ums and sta­bil­ize mar­kets, not ne­ces­sar­ily to en­cour­age con­tinu­ous cov­er­age.

Still, the un­der­ly­ing trade-off in the House’s bill—lower­ing healthy people’s premi­ums by po­ten­tially pri­cing sick­er people out of the mar­ket—has quickly proven to be polit­ic­ally con­tro­ver­sial.

Ques­tions about wheth­er the Trump ad­min­is­tra­tion will en­force the in­di­vidu­al man­date have already taken a toll on in­sur­ance mar­kets. Care­First BlueCross Blue­Shield re­cently sought sub­stan­tial premi­um in­creases for the plans it sells through the Obama­care ex­changes in Mary­land, Vir­gin­ia, and Wash­ing­ton D.C.

Among oth­er factors, Care­First said en­force­ment of the in­di­vidu­al man­date played a sig­ni­fic­ant role in the com­pany’s rate fil­ing, “as fail­ure to en­force the In­di­vidu­al Man­date makes it far more likely that health­i­er, young­er in­di­vidu­als will drop cov­er­age and drive up the cost for every­one else.”

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