How Democrats Learned to Love the Health Insurance Mandate
By Merrill Matthews
Texas Insider Report: DALLAS Texas Federal Judge Roger Vinson ruled yesterday that the Patient Protection and Affordable Care Act (aka ObamaCare) is unconstitutional clearly posing a threat to the Democrats effort to radically reform the U.S. health care system. The irony here is sweet.
The key provision that led 26 states plus others in separate suits to challenge the law is the health insurance mandate that requires people to have health coverage or pay a fine.
The irony is sweet because most Democrats historically havent been big supporters of the mandate. As a presidential candidate Barack Obama even campaigned against it.
Democrats real goal over the years has been to require health insurers to accept anyone who applies for coverage regardless of a medical condition known as guaranteed issue."
For example Democrats played the leading role the last time the country had a major health care reform debate in the mid-1990s.
Eight states New Jersey New York Vermont Massachusetts New Hampshire Maine Washington and Kentucky inspired by the Clinton health care reform effort passed legislation intended to improve access to coverage in the individual (i.e. non-group) market. But none of those state
reforms included a mandate to have coverage; the key ingredient was guaranteed issue along with a form of price controls that required insurers to charge everyone the same premium.
Why? Because most Democrats have long believed that health insurance should accept anyone who applies. Period.
Thats the way Medicare works. If you qualify by turning 65 you get covered even if you need immediate surgery.
To put it another way most Democrats see health coverage as social insurance" not real insurance" like life and auto coverage.
Lots of us warned at the time that guaranteed issue would create a death spiral" in the individual market. As the uninsured with serious medical conditions applied for coverage premiums would begin to rise for everyone. Those increases would drive out young healthy people who didnt have much money and didnt think anything would ever happen to them anyway.
As they began to drop coverage secure in the knowledge they could come back anytime and would be accepted the pool would get smaller and sicker and premiums would rise even more.
The warnings proved accurate; health insurance premiums in those eight states exploded. As a result Kentucky eventually dropped guaranteed issue and some of the other states modified their statutes.
The primary reason Democrats embraced the health insurance mandate in ObamaCare was to keep people from gaming the system by remaining uninsured until a medical condition developed. Plus the health insurance
industry demanded it be included as a condition of its support.
By contrast several key Republicans have supported a health insurance mandate over the years.
For example Rep. Jim McCrery (R-LA) pulled me aside in 1993 to explain his idea for mandating everyone to have high deductible health insurance along with a Health Savings Account. McCrery went on to be chairman of the House Ways and Means Health Insurance Subcommittee; and though he is now retired I dont think he ever abandoned his support for a mandate.
A mandate was also part of the Heritage Foundations earlier health care reform proposals. And though Massachusetts Governor Mitt Romney initially opposed the coverage mandate in the states 2006 prequel to ObamaCare Democrats demanded it and he now defends it.
However in the summer of 2009 the country erupted in anger over the coverage mandate in the House Democrats plan. Democrats dismissed those spontaneous protests in the streets and at town halls but Republicans knew better and immediately began to criticize the proposal.
Now Democrats defend the mandate at every opportunity.
The Obama Justice Department claims that it is the foundation of the whole health care bill even though it is threatening the constitutionalityand very survivalof their scheme to vastly expand government oversight and control of the health care system.
Republicans on the other hand are adamant about getting rid of the mandate. But in a policy reversal some of them now claim they want to keep the guaranteed issue provision against pre-existing conditions which opens the door to higher health insurance premiums just as we saw in those eight states that passed guaranteed issue in the 1990s.
The best solution for Republicans and Democrats would be to abandon both the mandate and the guaranteed issue provision. Instead of a stick to force people to buy coverage offer a carrot: a subsidy for lower-income families making too much to qualify or Medicaid. Thats already in ObamaCare; it just needs to be reduced and restructured.
To address the problem of the uninsured with pre-existing conditions Washington should embrace the state-based high-risk pools that have existed f
or years.
Adopting a few best practices for them will ensure a well-functioning and affordable safety net for the uninsurable which is what Democrats really wanted all along.
Merrill Matthews is a resident scholar with the Institute for Policy Innovation in Dallas.
