
With all the hoopla attending last week's passage in the House of Representatives of the
Affordable Healthcare for America Act, surprisingly little attention was given to the issue of the "individual mandate", a provision forcing most of the 50 million uninsured to either purchase insurance (most likely from a for-profit insurance company) or pay a fine. A
new report from the Center on Budget and Policy Priorities finds that a family of three with an income of $45,000 could be facing anywhere from $2500 to $4300 in annual health insurance premium costs, depending on which version of the bill is finally enacted. The report estimates that health insurance premiums could eat up as much as
half of the family's disposable income. Why has this provision attracted so little attention? And what can we do about it?
The individual mandate was the key demand of the insurance industry as the Obama administration and Congressional leaders began work on a health care reform bill, and an
army of lobbyists and
millions in campaign contributions helped to make it a reality. Insurance companies argued that if they were prohibited from denying coverage due to a pre-existing condition (another provision in the health reform bill) then all uninsured Americans should required to purchase insurance, or people would simply wait until they had a serious illness before obtaining insurance. Quickly, a
bipartisan consensus formed around the individual mandate, with support from
key Senate Republicans and
President Obama. At the same time, an employer mandate, requiring medium-sized and large businesses to insure their employees, was
dropped from consideration because it was considered too burdensome.
But without a strong public option that could pay doctors and hospitals at Medicare's reimbursement rates, the cost of subsidies to those now being required to buy insurance skyrocketed. Much of the debate about the cost of health care reform has centered around the cost of subsidies to the uninsured to enable them to pay the high rates demanded by for-profit insurers. The average cost of family coverage in the US is now
more than $12,000 a year, a number far out of reach of the millions of low-income service workers that make up the bulk of the uninsured. Given the concerns voiced by conservative Senate Democrats about the cost of the bill, it's likely that pressure to reduce these subsidies will mean that the final bill's cost to the uninsured to purchase insurance will tend toward the higher numbers in the Senate bill rather than the lower cost (to individuals) in the House bill.
In order to enforce the individual mandate, all of the bills under consideration include penalties for those who are uninsured and don't purchase insurance. The Senate Finance Committee bill, for example, levies a fine of $750 per adult in the household per year, exempting those families for whom the cost of insurance would exceed 8% of their annual income ($3,600 a year for a family with an income of $45,000 a year.) Because of the less-generous subsidies in the Senate Finance bill, families making between 220% of the Federal Poverty level (or $40,000 a year) and 400% of FPL (or $73,000 a year) can expect to pay more than 8% of their income for insurance and so be exempt from the penalty. Paradoxically, because the subsidies to those making less than 220% of FPL are just generous enough to bring their expected cost below the 8% threshold, these families, the poorest of the working poor, will be exposed to the penalty for non-participation. Thus, under the Senate Finance bill, a family of two adults and one child with an annual income of $36,000 could either pay $2500 in insurance premiums (money they likely don't have) or pay a $1500 fine - and be left without insurance. These families will be worse off than if Congress had done nothing at all to "help" the uninsured.
Recently, the insurance industry has begun to complain that the
fines for non-participation are not high enough, and so these fines may very well be increased in the final bill.
Why has the individual mandate attracted so little media and public attention? Compare the results of a Google News search for "
health care individual mandate" with a search for "
Health care death panels" and you'll find that death panels which are not in
any of the bills have garnered vastly more attention than fines for the uninsured which are in
every version of the health care bill. This can largely be explained by the bipartisan support that individual mandates enjoy. The corporate media only sees issues through a "Republican vs. Democrat" lens, and so policies that aren't attracting criticism from one of the major parties aren't considered worth reporting on. Add in the fact that the reporters covering the story are not themselves uninsured, and the general tendency of the media to wait until all the details have been settled before informing the public of what has been decided for them, and you have a near blackout of media coverage on an issue that has the potential to cost millions of families thousands of dollars a year.
Taking a step back to look at the big picture, what we have, whatever version of health care "reform" passes, is legislation that guarantees the health insurance industry 50 million new paying customers by criminalizing the millions of Americans who simply cannot afford to buy insurance. It's reasonable to ask who the real beneficiaries of this legislation are - the uninsured, or the insurance industry? In fact, the purpose of this legislation becomes crystal-clear when we examine the predicament that the insurance industry has priced itself into. The costs for health insurance have long
risen at rates far above the general rate of inflation, more than doubling over the past decade. As a result, many employers and individuals have been priced out of the insurance market, and the insurance industry now finds itself with a rapidly shrinking customer base. In any other industry, this would be cause for deep cuts in profits and costs, until the cost of the product could be brought into line with what the public was able to pay. But most industries aren't able to call on the coercive power of the Federal government to force people to buy their product. It's as if the prices of automobiles had risen at double-digit rates for years, until most Americans could no longer afford even a subcompact car, and in response, the auto industry proposed an "Affordable Automobiles for America Act" that required all Americans to buy a car. Problem solved!
What can we do about it? We are faced with a powerful corporate interest supported by a broad bipartisan consensus and abetted by a "news" media that either incapable of or uninterested in informing the public. At this point, it's hard to see how "call your Congressman" or even mass civil resistance can derail the plan for the individual mandate. Advocates for reform should be planning now for what happens
after "health care reform" passes both houses of Congress and is signed by the President. At some point, millions of Americans will find out that they have a choice between sending four hundred dollars a month to Cigna, or paying $1500 to the federal government in return for no insurance at all. Some will find their need for insurance great enough and the subsidies generous enough that they will purchase insurance, and may even consider themselves lucky to be able to do so. But what of the millions of uninsured who can't afford to buy insurance at exorbitant for-profit rates? Those families and individuals can respond to their plight as
individuals, and grumble privately while perhaps blaming themselves for their "failure" to earn enough to participate in the for-profit insurance market, or they could respond
collectively, seeing their mass refusal to be milked by the insurance industry as a
political act. Which approach the uninsured take will depend on the efforts that advocates of true reform take now to frame the issue and educate the public. Massive non-participation - not for ideological reasons, but due to a simple inability to pay - could form the core tactic of a powerful popular movement for the sort of free, universal care that people in every other industrialized country take for granted. First, large-scale non-participation will increase political pressure on Congress to revisit the issue of subsidies for the uninsured, and to make the subsidies more generous. Next, the massive costs of more generous subsidies will increase the pressure on Congress to create a genuine public option (which is not likely to be in any bill passed this year) in order to control costs. Finally, a government brought to bankruptcy by the staggering costs of premium subsidies even with a public option will be forced to turn to the only system that ever made any sense: single payer. As Winston Churchill
once said of Americans, "You can always count on them to do the right thing - after they've tried everything else."