Reprise, why we dislike the individual mandate…

Dan Weintraub, in his regular weblog, criticizes consumer groups — I am assuming Health Access is included in that — for praising the insurance market aspect of Gov. Schwarzenegger’s plan (calling for guaranteed issue and community rating) while panning the individual mandate.

His point is that the insurance market would become a death spiral if people only joined the insurance market when they needed it, and were not forced to pay into it when they are healthy.

Let’s be clear, we’re not opposed to individuals sharing in the responsibility of obtaining coverage. We support a tax system where everyone pays into a pool and gets something out of it. We like the way Speaker Fabian Nunez has fashioned his health proposal, which would require workers to take up insurance, IF their employer offers it and IF the coverage is affordable.

Those who support an individual mandate, however, often characterize the uninsured as “immortals,” people who believe they don’t need insurance and are “choosing” to go uninsured.

The numbers, though, tell a different story:

  • Of more than 6 million uninsured, only 8.7 percent did not take up coverage that was offered to them on the job.
  • Most of the working population makes less than three times poverty, which means most would be poor enough to qualify for the governor’s subsidy program (his cut-off is 250% poverty)
  • That means 2 percent of the entire population of uninsured, that’s 87,000, make more than three times poverty and are not buying insurance.

Proponents of the individual mandate then, are really attempting to punish this 2 percent of the population that is not buying coverage.

In reality, though, the individual mandate would affect everyone.

Say you’re a family of four with a total income of $51,000 in San Francisco. This is how the plan would affect you:

  1. Cost of a qualifying health plan (meaning that it doesn’t have a $30,000 out-of-pocket limit as many plans I searched on ehealthinsurance.com did) could cost about $1,600 a year (with no drug coverage) or $3,000 (with no lab/test coverage) or $6,000 for premium coverage.
  2. Up to $7,500 in out-of-pocket costs (of which prescription drugs or labs/tests would not count)

So let’s the family chooses the more moderately priced $3,000-a-year high deductible plan. They have a medical emergency — someone breaks a bone, is diagnosed with a disease, and require health care that adds up to $10,500 for the year. That’s more than 10% of the family’s entire income.

For these middle income, this plan would hurt the most.

The structure of the governor’s individual mandate has no limits for what consumers would be asked to pay. On the other hand, employers know their obligation would be capped at 4 percent of payroll. Doctors and hospitals would have their obligations capped at 2 and 4 percent, respectively. Even insurers know they have to spend up to 85 cents of every premium dollar on health care — which HMOs are already required to do (PPOs aren’t.)

Health Access California promotes quality, affordable health care for all Californians.

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