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Health Reform 101

with Lisa Zamosky

WebMD helps readers understand their health insurance and the new health care reform law. The Affordable Care Act is bringing sweeping changes to American health care. Lisa Zamosky is here to help you navigate the health care maze and understand how these changes affect you.

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Thursday, January 19, 2012

Three Reasons to Hope the Individual Mandate Survives

By Lisa Zamosky

If you’ve been following the news (as well as this blog) you know that one of the most hotly debated parts of the health reform law is the individual mandate – the requirement that everyone purchase health insurance or pay a fine starting in 2014.

The Supreme Court will hear arguments beginning in March about whether the individual mandate is allowed under the U.S. Constitution. We should know by the end of June if this aspect of the law is going to survive.

As unpopular as the individual mandate is with the public, the purpose of the mandate is, ironically, intended to support one of the more popular aspects of the Affordable Care Act:  As of 2014, insurers will no longer be allowed to deny anyone a health plan, including people with medical conditions. And people who are sick cannot be charged more for their coverage.

In order to hold insurers to that requirement, however, the cost of medical care must be spread evenly among people who use a lot of health care services and those who don’t. Otherwise, the pool of those with insurance is filled with mostly sick people driving medical costs skyward.

So that begs the question: What happens to the law if the individual mandate is shot down and ruled unconstitutional?

Life with No Individual Mandate

The Robert Wood Johnson Foundation (RWJF) sought to answer that question in a recent analysis.

Here are three primary conclusions researchers came to:

1) Fewer people would have health insurance. Today, approximately 50 million people in this country are uninsured. If the individual mandate remains in place, that number is cut in half, researchers say. Without it, 40 to 42 million people still go without insurance coverage.

2) Healthcare spending would drop. Fewer people with insurance leads to lower amounts of spending on medical care. That dynamic was highlighted in a recent report from the Centers for Medicare and Medicaid Services (CMS) that found 2010 marked the second year of historically slow growth in health spending. The reasons include high rates of unemployment, millions of people having lost private health insurance, less household income and more medical costs heaped onto consumers.

Bottom line: Fewer people have the money to go to the doctor, so less money is being spent on medical care.

That trend would continue if the individual mandate is dropped from the Affordable Care Act, according to the RWJF report. And although researchers say spending would decline, the government would only reduce its health care spending by about 3% (via Medicare and Medicaid), while covering only half as many people. And without the mandate, the cost of medical services provided but not paid for would come to about $20 billion.

3) Insurance premiums will rise. Finally, without the individual mandate, the cost of health insurance could rise by as much as much as 25%. The reason: Without a major incentive, young, healthy people are likely to forego coverage until they become sick.

Your Turn: Are you willing to buy insurance to keep the cost of coverage down for everyone? Or do you think the individual mandate should be thrown out of the Affordable Care Act?  Speak your mind in the comments section below.

Posted by: Lisa Zamosky at 2:52 pm

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