Senate Minority Leader Charles E. Schumer (N.Y.) and other Democrats spoke to reporters about the GOP’s health-care bill on Capitol Hill in Washington on June 22. (Melina Mara/The Washington Post)
Republicans have refused to hold substantive hearings on their health-care bill and to solicit input from relevant groups. In other words, their ideas haven’t been publicly vetted. That leads to some pretty silly proposals.
Lacking an individual mandate, the Senate Republicans today added a proposal to impose a six-month waiting period for anyone who allows their health-care coverage to lapse for 63 days or more in the prior year and later decides they need insurance/care. This may not make it through the reconciliation rules, allowing the bill to pass with just 50 votes with a tie-breaking vote by the vice president. The Hill reported, “The addition of the six-month waiting period could make it more difficult to pass the legislation if the Senate parliamentarian rules the provision violates the complex budget reconciliation rules. Republican leadership was working over the weekend to make sure the provision complies with the rules and can be included.” Even if it does make it through the parliamentarian’s scrutiny, the idea is a non-solution.
The individual mandate was intended to coerce young, healthy people into buying insurance, thereby helping to pay for older, sicker people in the exchanges. Younger people might avoid buying insurance because they foolishly think they won’t get sick. But if they think they won’t get sick, why would they be persuaded by a penalty that goes into effect when they, um, get sick?
Actually, one significant problem with the exchanges is that the mandate was not tough enough. People could move in and out of a plan too easily, thereby avoiding paying into the system and helping to subsidize those older, sicker people. In June 2014 the Congressional Budget Office found that 87 percent of those without insurance could avoid the penalty. “The decrease in the number of people who are projected to pay the penalty largely stems from an increase in CBO and [Joint Tax Committee’s] projection of the number of people who will be exempt from the penalty. That increase is attributable in part to regulations issued since September 2012 by the Departments of Health and Human Services and the Treasury and in part to technical updates and changes in the economic outlook.” In other words, it was too easy to slip in and out of the system.
The regulations or “hardship exemptions” seemed reasonable on the surface:
The hardship exemption rules, for example, let anyone who “experienced domestic violence” avoid the mandate, without providing any documentation of abuse. Getting a shut-off notice from a utility is also sufficient to claim a hardship exemption.
In addition, the law forbids the IRS from using its normal enforcement tools to collect unpaid penalties. Tax experts say the best it can do is withhold the penalty amount from any tax refund due.
The incredibly broad exemption from the insurance mandate also threatens to undermine ObamaCare’s market regulations. The law included the mandate as a way to force most people into buying coverage, which would in turn keep premiums down for everyone else.
If you can get out of paying or understand you cannot really be forced to pay up, there is much more incentive to game the system.
So if you really wanted to prevent the “death spirals” and keep young people in the exchanges to spread the cost from older, sicker people, you would tighten the mandate, not do away with it and come up with a flimsy substitute.