Government lawyers say Obamacare will fall into a death spiral if the Supreme Court strikes down the provision in the Affordable Care Act requiring everyone to carry health insurance. Without the individual mandate, they say, some healthy people will forgo insurance to save money. That will force insurers to raise premiums on everyone else, the argument goes, which will prompt even more people to drop out until only the sickest remain.
Judging from the skeptical questions posed by the justices this week, it’s possible the mandate will die. If it does, there will be some serious scrambling for another way to preserve the health-care law’s two key protections: the right of everyone to be insured and the prohibition against charging people extra for costly preexisting conditions.
I compiled a list of 11 alternatives to the individual mandate. Most would require Congressional action, which could be a stretch. The alternatives come from a variety of sources. Ralph Lindeman of Bloomberg BNA ran through several concepts in an excellent March 23 piece for Bloomberg’s ongoing special report, “Health Care at the High Court.” I also drew on a Government Accountability Office report, Ryan Lizza’s March 27 piece on The New Yorker blog, and Ezra Klein’s Bloomberg View column from March 28.
Then I asked Larry Levitt, a senior vice president at the Kaiser Family Foundation, for a quick take on each alternative. Kaiser is a nonpartisan health-care policy think tank that hasn’t taken a position on the Affordable Care Act, pro or con. Here goes:
1. Relabel the mandate to escape the high court’s scrutiny. Give people a tax credit if they do carry insurance, which is functionally the same as penalizing them if they don’t. Sound like a sly evasion? It’s essentially the approach advocated by House Budget Committee Chairman Paul Ryan.
Levitt: “It’s probably the simplest way of achieving the same thing as the individual mandate. The only downside is the political downside of using the tax system.”
2. Increase subsidies, such as the law’s existing set of tax credits for low-income Americans, to induce more people to sign up voluntarily. This would be along the lines of the enticements in Medicare Parts B (doctors’ and outpatient services) and D (prescription drugs).
Levitt: “Increasing those subsidies would certainly further stabilize the market,” though at a cost. Levitt notes that even with the individual mandate, Obamacare wouldn’t cover everyone. The Congressional Budget Office estimates that about 26 million Americans would be uncovered in 2016—undocumented immigrants, people who are exempt because of low income, and people who simply blow off the mandate and pay the modest fine instead.
3. Use government funds to compensate insurers for the cost of “adverse selection,” in which only sick people sign onto their plans.
Levitt: ” You’d have to infuse federal money into the system and redistribute that to the insurers. It’s like cheap reinsurance.”
4. Have the government and/or employers enroll people into health plans automatically, but with an option to drop insurance. Count on inertia and procrastination to keep them in the system.
Levitt: “It’s a good idea but hard to make work operationally. You have to find them and enroll them.”
5. Require people who go without insurance to sign a form acknowledging that they won’t be able to get back in for five years, even if they have an accident or contract a costly disease and want to get covered right away.
Levitt: When misfortune befalls uninsured people, “are we really prepared to turn them away?”
6. Leave it to the 50 states to enact their own mandates under state law, which would not be subject to Supreme Court review.
Levitt: “If Congress stalemates, it’s possible that’s what could happen by default.”
7. Penalize people who delay enrolling. Charge them more or strip them of the right to buy insurance at a standard rate regardless of preexisting conditions. There’s a precedent in Medicare: People who enroll in Medicare Part B after age 65 pay a 10 percent penalty on their Part B premium unless they have employer-provided health insurance.
Levitt: “It’s a little easier to do in Medicare because people make that decision once for the rest of their lives. People under 65 may want to go in and out.”
8. Use government funds to pay health-care providers for giving uncompensated care to the uninsured.
Levitt: This would protect doctors and hospitals from being overwhelmed by uninsured patients if there’s no mandate.
9. Demand proof of health-insurance coverage to get certain government services.
Levitt: A stick, not a carrot.
10. Require or encourage credit-rating agencies to use health insurance status as a factor in determining credit ratings.
Levitt: “This is using a private mechanism to penalize people who don’t have insurance.”
11. Do intensive outreach to get people to enroll.
Levitt: “In Massachusetts, the Boston Red Sox went on TV to get people to sign up.”