- Experts from the Harvard Business School, Duke University, and David Geffen School of Medicine at UCLA debate the viability of an individual mandate as a means of achieving universal coverage without a single payer.
According to Regina Herzlinger, DBA, Barak Richman, JD, PhD, and Richard Boxer, MD, the lack of support for creating risk pools for patients with preexisting conditions through an infusion of state or federal funds leaves the individual mandate as an attractive alternative to universal coverage.
“Although vilified by some, the mandate is attractive for several reasons,” the trio write in a recent Journal of the American Medical Association viewpoint.
“It is relatively easy to implement, is effective in pooling risk, and reflects the values of individual responsibility,” they continue. “Coverage is primarily funded by the enrollees rather than by general taxation. For these reasons, some nations that are committed to a private health insurance sector have achieved universal coverage and effective risk pooling by mandating the purchase of insurance.
While both Republicans and Democrats want to preserve several costly features of the Affordable Care Act, including anti-discrimination based on pre-existing conditions and eliminating lifetime or annual coverage limits, these are expensive measures that need proper financial support.
The challenge experts address in depth are the financial obstacles for providing these services for all healthcare consumers regardless of risk factors.
Individuals with high-cost chronic conditions and those affected by traumatic events make up 20 percent of individuals in healthcare system but account for 80 percent of healthcare spending.
Based upon funding and policy factors, the authors claim that individual mandates for health insurance with penalties for non-participation are an effective way to solve this problem. Individual mandates are a polarizing healthcare topic, but the authors have reason to believe they are effective.
Analyzing three countries with individual mandates, the trio found that countries where universal coverage is working tend to provide proper enforcement and subsidies that make up for differences in care costs and levels of care.
“In sum, health insurance models in Switzerland, Singapore, and Germany suggest that an individual mandate, with adequate subsidies, can achieve affordable universal coverage. But the recipe for their success also includes firm penalties,” the authors said.
“The Internal Revenue Service’s recent announcement that, to comply with President Trump’s January 20, 2017, executive order rolling back the ACA, it might not pursue individuals who fail to provide evidence of health insurance will further dilute the current individual mandate. Achieving universal coverage, like these 3 nations, requires a more forceful approach.”
The three experts address the use of high-risk pools as a way to manage this concern. By removing these individuals from general enrollee population and using government funds to subsidize their insurance premiums, the cost of insurance in return is lower for everyone else.
High-risk pools require substantial infusion of funds to succeed. The authors cited figures from the Agency for Healthcare and Research Quality (ARQH) that reveal the cost gaps between high-risk patients and low-risk patients.
“In 2016, the costliest 5% of patients younger than 65 years (the age before Medicare begins) accounted for nearly 50% of all expenditures for that age group, yet their insurance premiums can realistically cover only a small fraction of their costs,” they write.
Policy makers have suggested plans that include a proposal for $25 billion in state grants over ten years or steps to channelhigh-risk patients into Medicare pools, making the government the risk-bearer. However, the authors believe federal policy makers are unlikely to commit a proper amount of funds based on much previously state grant funding and further complications to Medicare.
The authors conclude that any option to make universal coverage attainable will require financial sacrifices from the federal government and individuals.
“If the goal is universal health coverage that provides care even for patients with the highest healthcare costs without relying on public insurance programs, the financial burden must be spread across the whole population,” the authors wrote. “This requires either massive government spending, whether through high-risk pools or Medicare, or requiring individuals to purchase insurance.”
Ultimately, the trio calls for bipartisan commitment to an individual mandate to achieve universal coverage.
“It is time to stabilize the premiums of the universal insurance market by neutralizing the political disagreements surrounding the ACA’s mandate and penalties. As these 3 countries demonstrate, maintaining the popular aspects of the ACA requires keeping its less popular part, and achieving the stated goal of universal coverage requires a serious commitment to individual responsibility,” they conclude.