The insurance industry did itself no favors last week when it released a report purporting to show that health care reform would cause insurance premiums to skyrocket. The report focused on only a few specific changes contained in the various reform bills, rather than the bills in their entirety. And the report came out just a day before the Senate Finance Committee, the last of five congressional panels with jurisdiction, was scheduled to vote on a bill. Most of Washington interpreted the report as an effort to delay, if not derail, the reform debate--which it almost surely was. The industry quickly found itself on the defensive. And the Senate Finance Committee pressed ahead, passing a bill just as it was expected to do.
But buried inside the insurers' new piece of propaganda were two perfectly valid arguments--arguments that advocates of reform would be foolish to ignore.
The first of these arguments is about what's come to be known as the individual mandate. A central element of every reform bill that's gone through committee is a requirement that everybody obtain insurance.
There's a moral argument for the mandate: We want a system that includes everybody, and that means everybody paying what they can for coverage. There's also a more practical rationale. Without a mandate, young and relatively healthy people might decide not to buy insurance, because they figure they're unlikely to have high medical expenses. (Insurance only works when there's a large number of people paying in, so there are enough contributions from the majority who are healthy to offset the costs of those who are sick.) Besides, even young and healthy people can end up with high medical expenses, from an accident or a serious disease. Forcing them to get insurance is actually in their own interest.
Trouble is, individual mandates are not necessarily popular. Just ask President Obama, who exploited that fact during his presidential campaign. Remember, Hillary Clinton was the Democrat proposing a mandate; Obama attacked her for it. As the Senate Finance Committee deliberated over its version of reform, it decided to weaken its version of the mandate. It made it easier for people to opt out of the requirement, by demonstrating that buying insurance would be a hardship. It also reduced the penalty that people would face if they didn't comply.
Neither effort was particularly controversial, although both should have been. At some point, if the mandate becomes too weak, it ceases to be effective. People ignore it and then we're back to the problem of young, healthy people opting out of the system. It's not clear whether the reductions the Senate Finance Committee proposed went that far; experts offer different opinions. But the weakening of the mandate is, at the very least, risky.
"the insurers rightly cited in their flawed report: The bills in Congress don't do enough about the cost of coverage". The best thing we could do about cost of coverage is to eliminate for profit health insurance. Plenty of other countries cover everyone, with better outcomes and for much less money. None of them rely on private, for profit insurance (maybe for extras, but not for the majority of care). They do it with single payer, or intelligent, strong government regulation of private, not-for-profit insurance. Would that the bills in Congress are doing enough about the cost of coverage.
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