Jennifer Wriggins, University of Maine School of Law. Originally posted in Bangor Daily News November 22, 2017.
Republicans in the Senate are working quickly to bring their version of a tax bill to the floor. But as it stands, their bill will do much more than cut tax rates – it will also lead to millions of Americans losing their health insurance.
The current version of the Senate bill includes a repeal of the Affordable Care Act’s requirement that people who do not have insurance through their job or a program like Medicare purchase health insurance or pay a tax penalty, the so-called individual mandate. This part of the ACA has resulted in millions of Americans getting insurance. And most people who purchase health insurance on the exchanges, the mechanism through which health insurance is sold, receive tax subsidies to help fund the insurance purchase. Repealing the individual mandate now makes no sense.
But why do we have the mandate in the first place? Who came up with this crazy idea?
The individual mandate idea actually came from the Heritage Foundation, a right-leaning think tank. Back in 1989 they published a report with a goal of “Assuring Affordable Health Care For All Americans,” as the report was called, by mandating that all households have sufficient insurance. They explained: “Society does feel a moral obligation to insure that its citizens do not suffer from the unavailability of health care. But on the other hand, each household has the obligation, to the extent it is able, to avoid placing demands on society by protecting itself.” Hence, the idea that each household obtain insurance. The Heritage Foundation also proposed tax credits for households that could not afford to buy health insurance as well as other reforms.
When the individual mandate was included in the Affordable Care Act, it was also meant to help people who need to buy insurance individually. It may be hard to remember, but when the ACA was passed in 2010 there was a widespread sense that something big needed to be done to fix or at least improve the health care system.
At the time, around 45 million people lacked health insurance. People who were older and sicker tended to buy health insurance; people who were healthier did not. This is a common problem when people have the choice to buy insurance. It’s known as “adverse selection.” The result was that insurance companies had to pay much more in claims than they had predicted. So, companies raised rates, put caps on the amount of money that could be spent for treatment of certain diseases as well as lifetime caps, and often aggressively tried to weed out unhealthy people from the insurance rolls.
Congress passed the individual mandate as part of a package of reforms aimed at bringing more people into the insurance market to better spread health care costs much more widely, improve quality of treatment nationwide, and begin to control costs.
Millions of people have health insurance as a result of the Affordable Care Act. They and their children can get preventive care and the help they need when unexpected health problems arise.
In addition, insurance companies now have to cover all people who want to buy insurance; there are no lifetime caps or caps on certain diseases; and there are subsidies and tax credits to help people pay for insurance.
Why would getting rid of the individual mandate be a disaster?
Simply, if Republicans in the Senate have their way, we are back to the days before it was passed. Sicker people will try to buy insurance, healthier people won’t. And the pool of insured people will become much more expensive to insure, causing rates to skyrocket. Within 10 years, 13 million people will lose their health insurance as a result, according to a recent estimate from the nonpartisan Congressional Budget Office. In Maine, 50,000 people will lose their health insurance, according to a Maine Center for Economic Policy estimate.
Many people do not like the word “mandate” or the idea that they have to buy anything. But mandates are everywhere, and they play an essential role in a complex society like ours. The bank mandates we buy insurance as a condition of giving us a mortgage when we buy a house or mobile home. States require that we buy several types of insurance when we drive a car. Flood insurance is mandated if we have a house in high-risk flood zone with a mortgage.
The individual mandate is a success. It has helped millions of Americans obtain health insurance, get preventive care and be there as a safety net if something happens to them or their child.
Repealing it now would be a big mistake and a disaster for the country.
Jennifer Wriggins teaches insurance law and health care law and ethics at the University of Maine School of Law. She is a member of the Maine chapter of the national Scholars Strategy Network, which brings together scholars across the country to address public challenges and their policy implications. Members’ columns appear in the BDN every other week.