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It’s an individual mandate that most Americans must purchase auto insurance if they want to drive. But, mandatory health insurance? Is that the right way to reform healthcare? Read further to hear executive editor Bob Keaveney’s cogitations on this issue.
Ron Wyden likes to tell the story of the healthy young ski bum who confronted him at a town meeting. The Democratic Oregon senator was trying to sell his healthcare reform plan.
“Where in the Constitution,” the guy demanded, “does it say I have to buy health insurance?”
It doesn’t, but Wyden’s Healthy Americans Act does. Just about every American would, under the proposal, be required to purchase health insurance. Is such a mandate the right way to reform healthcare? When I started researching this column, I thought not.
I’ve changed my mind.
Under the plan, the poor would get help buying coverage, paid for by a new tax on business. And, during the first two years after the law takes effect, employees at companies that currently offer health benefits would instead receive increased pay equal to the value of the benefit. Workers would have to use that extra income to buy coverage.
After two years, everyone would have to buy their own insurance through state and regional cooperatives. Those with incomes below 400 percent of the federal poverty line would be subsidized on a sliding scale. The cooperatives would also collect the premiums, most of which would be withheld from workers’ paychecks, just as they are now.
The cooperatives would produce a market for affordable individual insurance products by creating large risk pools untethered to employment. That would mean the end of employer-based insurance, a system so perfectly useless to physicians, patients, and business that it should have been drowned in the nearest bathtub 20 years ago.
Workers who today get coverage through their jobs might, at first, end up paying a little more under the new system but they would get to choose their own insurer, and insurers would be required to offer plans no worse than what members of Congress get. More important, health insurers would finally be beholden to their members - and by extension, to you - not to their members’ employers.
Employers would pay a new tax - generating up to $100 billion annually - but would no longer have a huge healthcare bill. Insurers would have new mandates to deal with but would gain access to 48 million new customers - America’s current uninsured.
And Medicaid would finally get the toe tag it deserves.
The Lewin Group, a consulting firm, found that overall healthcare costs would go down by $4.5 billion thanks to lower administrative costs, even though virtually all Americans would have coverage under the plan.
So what we have here is a plan that covers almost everyone, ends Medicaid, and empowers individuals to choose their own coverage - all while reducing overall healthcare costs, and without creating a vast new federal bureaucracy or force-marching everyone into some Medicare-like government coverage.
What could be wrong with that? Not much, frankly, but …
For one thing, it’s not clear that small companies who don’t currently offer coverage to workers could handle the tax, even though their obligation would be relatively tiny. Also, some people who make a bit more than the income cutoff for subsidies - $41,600 for an individual in 2008 - could struggle. The penalty for noncompliance is a stiff fine. And the new system would still be focused on episodic care - treating problems instead of preventing them.
Some people are attracted to the administrative simplicity of a government-run, single-payer system like Canada’s. But Wyden is calculating correctly that single-payer healthcare is, if nothing else, politically implausible here. A plan like his should be more appealing to conservatives because it preserves the private market.
The most controversial aspect is, of course, the insurance mandate. Most Americans have natural tendencies against nanny-state policies. I’m one of them. Then again, most people who don’t have insurance wish they did. Only a minority of the uninsured are, like Wyden’s ski-bum constituent, simply choosing not to get insurance that they could afford. And when this budding Libertarian was told that he’d be covered under the plan should he break a leg on a mogul, even he replied, “Cooooool.”
Indeed, Wyden’s plan is cool.
Bob Keaveney is the executive editor of Physicians Practice. Tell him what you think at firstname.lastname@example.org or via email@example.com.
This article originally appeared in the June 2008 issue of Physicians Practice.