OP-ED | Replacing The Individual Mandate With Something Better
The Affordable Care Act’s unpopular individual mandate has been repealed as part of a massive tax overhaul, leaving most other elements of the ACA in place. No part of the ACA is less loved than the individual mandate, a tax designed to encourage uninsured folks to get health insurance. It hits working people who do not have insurance through their jobs, but who don’t realize they qualify for the ACA’s no-cost or low-cost insurance options – or who make too much to qualify for assistance, but can’t afford to buy health insurance on their own.
The problem is that no national health system can function properly unless the entire population is in the system, and the Congressional Budget Office estimates that if the individual mandate goes away, about 13 million Americans will lose coverage by 2027. The fact that many Americans remain uninsured is one of the main reasons we pay twice as much for similar quality healthcare as our chief international economic competitors such as Germany and Japan – all of whom have universal coverage.
Uninsured people make healthcare more expensive because they tend to delay care, so when they finally do show up at the hospital, their conditions are much more severe and expensive to treat, causing caregivers to make up the losses by raising prices for the rest of us. Also, since sick people tend to hang onto their insurance at any price, the folks who drop their coverage when the mandate goes away will be predominantly healthy – and when healthy people stop paying premiums, rates go up to cover the sicker people left behind.
The ACA, while a great improvement on what came before, has many flaws – including the perceived punitive structure of the individual mandate, which hit more than 60,000 Connecticut families in 2016 without leaving them anything to show for it. But again, we can’t make progress on healthcare costs until everyone is covered, so unless and until the U.S. adopts a more economically competitive system that auto-enrolls every person into health insurance, we need some mechanism to convince more uninsured people to buy insurance. That’s why, unpopular though the individual mandate may be, a number of states are considering implementing their own state-level mandate when the federal tax disappears in 2019.
Connecticut needs to replace the mandate, but it would be a mistake to simply copycat the ACA’s rightly unpopular tax. Congress’s recent decision to end the mandate is misguided, but the silver lining is that it gives Connecticut the opportunity to adopt an innovative, improved, and less punitive state-level substitute.
In fact, Connecticut’s solution does not even need to be a tax – which is good news, given Connecticut’s current difficult political climate, including the ongoing budget crisis and the state’s focus on retaining business and residents.
There is a non-tax fix that would retain the system-wide benefits of the individual mandate, while at the same time replacing some of the mandate’s sting for uninsured families with a tangible, lasting benefit.
We should continue to collect money from uninsured working families, but not as a tax. Instead of disappearing into state coffers, the money collected from the uninsured should be placed into a new type of personal health responsibility investment account owned by the uninsured person. Similar to existing Health Savings Accounts that many consumers now have through their work-based insurance, the money could be spent only on healthcare costs or to buy insurance. In order to avoid a state budget impact, the administration fees for these new accounts could be paid directly from the accounts, but the fees would be kept modest.
Without new funding, there is no completely pain-free way to nudge uninsured families to buy insurance, so this new model still relies on collecting money from uninsured consumers, as the ACA currently does. However, instead of the zero benefit that taxpayers currently experience when they pay the ACA penalty, holders of Connecticut’s new health responsibility accounts would immediately get a small fund for emergency health expenses or insurance – and that amount would grow every year they remained uninsured. Hospitals and other medical providers would benefit as well, since their uninsured patients would be arriving with a least some money to pay for care.
We need to replace the ACA mandate, but let’s do it in a creative way that provides a tangible, ongoing benefit to the hard-working Connecticut families that we must persuade to join the healthcare system in order to reach our ultimate goal of affordable, quality healthcare for the whole community.
Ted Doolittle is the head of the State Office of the Healthcare Advocate, an independent agency representing the interests of Connecticut healthcare consumers.
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