This evening THCB welcomes our newest contributor. Robert Laszweski has been a fixture in Washington health policy circles for the better part of three decades. He currently serves as the president of Health Policy and Strategy Associates of Alexandria, Virginia. Before forming HPSA in 1992, Robert served as the COO, Group Markets, for the Liberty Mutual Insurance Company. You can read more of his thoughtful analysis of healthcare industry trends at The Health Policy and Marketplace Blog. Can you really mandate people to buy health insurance? That’s not so much a policy question as a practical question and it is what Hillary Clinton seems to be saying
is the big difference between her health care reform plan and the health reform plan of Barack Obama. That’s why a news story this week out of Massachusetts caught my eye.
It seems that the Mass Department of Revenue is in the process of drafting new regulations to up the penalty for people who do not buy health insurance. If they are approved, the maximum penalty for those who do not buy health insurance would jump from $219 per year to a maximum of $912 in 2008. The penalty is estimated to be half the per person cost of the lowest priced health plan available.
Penalties would vary by age and the time a person was without health insurance.
A 26 year-old would have a penalty of $672 per year and those over 26
would pay $912. So, a family of two adults over 26 would pay about
$1,800 in penalties if they didn’t buy health insurance (a reader has correctly pointed out children are not covered by the mandate).
The state health plan administrator- The Connector–has
said that about 290,000 of the states 400,000, that were believed to be
uninsured when the program was launched, have purchased coverage. But
most of these people are those that get either all or most of their premiums paid by the state.
Among those who get no subsidy, relatively few have chosen to buy
insurance likely because they cannot afford the thousands of dollars in
premiums for the minimum policy with a $2,000 deductible.
At a practical level, we are talking about middle class families
being required to buy a health insurance policy costing $6,000 to
$9,000 a year (with a $2,000 deductible) or having to pay a $1,800+
The Connector has already exempted thousands of residents from the mandate because there was no way they could buy the coverage.
It is notable that the senior Medicare Part D drug benefit is voluntary
but the vast majority of seniors have purchased it. Why? Because the
government pays 75% of the costs and it is affordable. The Part D experience shows that if insurance coverage is affordable people will buy it.
The Massachusetts experience tells us if it is not affordable,
people will not–or maybe more appropriately cannot–buy health
It’s one thing to mandate health insurance coverage, but as we are
learning in Massachusetts, the real challenge is making it affordable.
On the issue of health insurance mandates, Barack Obama, and the Republican candidates, are right.