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...from WSJ
Insurers Set Plans in Case Mandate Is Quashed
By LOUISE RADNOFSKY
The insurance industry and advocates of the health-care overhaul are sketching out contingency plans in case the Supreme Court strikes down a central part of the law in the coming months.
Their worst-case scenario: The court knocks out the law's mandate that most Americans carry insurance or pay a fee but leaves in place requirements that insurers sell policies to all applicants. The result, they say, would be spiraling insurance premiums, because sick people would buy insurance and nothing would stop healthy people from waiting to buy it until they needed it.
"The insurance reforms would have to change if the mandate were struck," said Justine Handelman, vice president of legislative and regulatory policy for the Blue Cross and Blue Shield Association trade group.
The "individual mandate," as it is called, is part of the 2010 health-care law President Barack Obama championed, and the focus of the constitutional challenge to it. Supporters of the law, the Patient Protection and Affordable Care Act, say the mandate is the best way to extend health-insurance coverage to millions who can't afford it and discourage people from staying uninsured and passing the costs of their care to others.
Opponents say the federal government can't compel Americans to buy a product. "The mandate imposes an extraordinary and unprecedented duty on Americans to enter into costly private contracts," argue two of those opponents, the National Federation of Independent Business and Georgetown University law professor Randy Barnett, in court filings.
Contingencies
Some alternatives to the individual mandate that the insurance industry is weighing
Two appeals courts have ruled in favor of the mandate, and one has struck it down but said the rest of the overhaul should stand. The high court starts weighing the issues March 26. A ruling is expected in June.
The case puts the industry, and the Obama administration, in a tricky position. They maintain they are confident the whole law will stand, but they don't want to be caught flat-footed if it doesn't.
Several officials from large health insurers said that if the mandate were struck down, their first priority would be persuading members of Congress to repeal two of the law's major insurance changes: a requirement to cover everyone regardless of his or her medical history, and limits on how much insurers can vary premiums based on age. The next step, they say, would be to set rewards for people who purchase insurance voluntarily and sanction those who don't.
Jessica Waltman, senior vice president of government affairs for the National Association of Health Underwriters, said she favored insurance plans offering narrow annual windows in which people could buy policies. Insurers would levy penalties for late enrollment, with exceptions for changes in status such as a marriage or the birth of a child.
From there, insurers could offer significantly lower premiums to younger and healthier people to encourage them to sign up. They could deny treatment for specific conditions, especially right after a policy is purchased, to dissuade people from signing up only once they get sick.
Ron Pollack, head of Families USA, which advocates for the health-care overhaul, said supporters were publicly focused on fighting for the mandate, but "obviously in the back of one's mind some thought is given to alternatives"—for example, letting companies levy penalties on people for enrolling outside of set time periods.
Paul Starr, a professor of sociology at Princeton University who worked on President Bill Clinton's failed universal-health-insurance effort, argues that the individual mandate was a mistake, because it was inflammatory, yet too weak to be effective. Mr. Starr, who broadly supports the Obama administration's efforts to overhaul the health system, has suggested that Democrats consider a system in which anyone who doesn't get insured can sign away access to the law's subsidies, insurance exchanges for buying policies and guaranteed coverage of pre-existing medical conditions for five years, rather than pay the fee.
White House spokesman Nick Papas declined to answer questions about any backup plans, saying the law is constitutional, "and we are confident the Supreme Court will agree."
The insurance industry would face hurdles in persuading lawmakers to take action, especially in an election year. Republicans who have tried to amend parts of the law have faced criticism from other opponents of the act, who say it is a strategic mistake to try to make what they consider a bad law slightly better.
All of the Republican presidential contenders have pledged to try to scrap the whole law if elected. Democrats are reluctant to spend political capital fixing legislation that absorbed a year of congressional work and has gotten mixed reviews from voters.
Privately, some insurance-industry officials say losing the mandate might not be quite the blow some supporters suggest, because it already isn't strong enough.
The fee for not carrying coverage starts at $95 a year or 1% of income, whichever is higher, when the requirement takes effect in 2014, a far lower penalty than insurers wanted. Even if the mandate is upheld, they say, they will ask for stronger ways to enforce it.
The nonpartisan Government Accountability Office last year laid out a list of alternatives to the mandate, in response to a request from Sen. Ben Nelson (D., Neb.). In addition to the ideas favored by the insurers, the alternatives included levying a national tax to pay for uncompensated care, increasing federal subsidies to help people purchase health insurance, encouraging credit-ratings firms to use health-insurance status in determining ratings, and expanding employers' roles in enrolling people in insurance plans. Those options have yet to gain widespread support.
Insurers Set Plans in Case Mandate Is Quashed
By LOUISE RADNOFSKY
The insurance industry and advocates of the health-care overhaul are sketching out contingency plans in case the Supreme Court strikes down a central part of the law in the coming months.
Their worst-case scenario: The court knocks out the law's mandate that most Americans carry insurance or pay a fee but leaves in place requirements that insurers sell policies to all applicants. The result, they say, would be spiraling insurance premiums, because sick people would buy insurance and nothing would stop healthy people from waiting to buy it until they needed it.
"The insurance reforms would have to change if the mandate were struck," said Justine Handelman, vice president of legislative and regulatory policy for the Blue Cross and Blue Shield Association trade group.
The "individual mandate," as it is called, is part of the 2010 health-care law President Barack Obama championed, and the focus of the constitutional challenge to it. Supporters of the law, the Patient Protection and Affordable Care Act, say the mandate is the best way to extend health-insurance coverage to millions who can't afford it and discourage people from staying uninsured and passing the costs of their care to others.
Opponents say the federal government can't compel Americans to buy a product. "The mandate imposes an extraordinary and unprecedented duty on Americans to enter into costly private contracts," argue two of those opponents, the National Federation of Independent Business and Georgetown University law professor Randy Barnett, in court filings.
Contingencies
Some alternatives to the individual mandate that the insurance industry is weighing
- Penalize those who enroll outside of short annual windows; deny treatment for specific conditions, especially right after a policy is purchased
- Reward certain insurance buyers, such as offering much lower premiums for younger and healthier people
- Expand employers' role in automatically enrolling employees for health insurance
- Urge credit-rating firms to use health-insurance status as a factor in determining individuals' ratings
Two appeals courts have ruled in favor of the mandate, and one has struck it down but said the rest of the overhaul should stand. The high court starts weighing the issues March 26. A ruling is expected in June.
The case puts the industry, and the Obama administration, in a tricky position. They maintain they are confident the whole law will stand, but they don't want to be caught flat-footed if it doesn't.
Several officials from large health insurers said that if the mandate were struck down, their first priority would be persuading members of Congress to repeal two of the law's major insurance changes: a requirement to cover everyone regardless of his or her medical history, and limits on how much insurers can vary premiums based on age. The next step, they say, would be to set rewards for people who purchase insurance voluntarily and sanction those who don't.
Jessica Waltman, senior vice president of government affairs for the National Association of Health Underwriters, said she favored insurance plans offering narrow annual windows in which people could buy policies. Insurers would levy penalties for late enrollment, with exceptions for changes in status such as a marriage or the birth of a child.
From there, insurers could offer significantly lower premiums to younger and healthier people to encourage them to sign up. They could deny treatment for specific conditions, especially right after a policy is purchased, to dissuade people from signing up only once they get sick.
Ron Pollack, head of Families USA, which advocates for the health-care overhaul, said supporters were publicly focused on fighting for the mandate, but "obviously in the back of one's mind some thought is given to alternatives"—for example, letting companies levy penalties on people for enrolling outside of set time periods.
Paul Starr, a professor of sociology at Princeton University who worked on President Bill Clinton's failed universal-health-insurance effort, argues that the individual mandate was a mistake, because it was inflammatory, yet too weak to be effective. Mr. Starr, who broadly supports the Obama administration's efforts to overhaul the health system, has suggested that Democrats consider a system in which anyone who doesn't get insured can sign away access to the law's subsidies, insurance exchanges for buying policies and guaranteed coverage of pre-existing medical conditions for five years, rather than pay the fee.
White House spokesman Nick Papas declined to answer questions about any backup plans, saying the law is constitutional, "and we are confident the Supreme Court will agree."
The insurance industry would face hurdles in persuading lawmakers to take action, especially in an election year. Republicans who have tried to amend parts of the law have faced criticism from other opponents of the act, who say it is a strategic mistake to try to make what they consider a bad law slightly better.
All of the Republican presidential contenders have pledged to try to scrap the whole law if elected. Democrats are reluctant to spend political capital fixing legislation that absorbed a year of congressional work and has gotten mixed reviews from voters.
Privately, some insurance-industry officials say losing the mandate might not be quite the blow some supporters suggest, because it already isn't strong enough.
The fee for not carrying coverage starts at $95 a year or 1% of income, whichever is higher, when the requirement takes effect in 2014, a far lower penalty than insurers wanted. Even if the mandate is upheld, they say, they will ask for stronger ways to enforce it.
The nonpartisan Government Accountability Office last year laid out a list of alternatives to the mandate, in response to a request from Sen. Ben Nelson (D., Neb.). In addition to the ideas favored by the insurers, the alternatives included levying a national tax to pay for uncompensated care, increasing federal subsidies to help people purchase health insurance, encouraging credit-ratings firms to use health-insurance status in determining ratings, and expanding employers' roles in enrolling people in insurance plans. Those options have yet to gain widespread support.
