Analysts individual mandate to health reform law

When the U.S. Supreme Court hears challenges to the national health-reform law starting Monday, it will then have to decide if the federal government has the authority to insist that people buy health insurance. Striking down the so-called "individual mandate," the most controversial provision of the Affordable Care Act, should the top court do so, wouldn't deliver a death blow to the health-reform package. But, it would alter projected costs and consumer participation, health policy experts said. "If the individual responsibility provision is struck down, it is important that mechanisms are in place to ensure there's a balance in insurance pools to make sure younger, healthier people participate so premiums don't escalate," said Ron Pollack, executive director of Families USA, a national advocacy group for health-care consumers. Pollack, who supports the Affordable Care Act, said other methods of attaining broad participation exist to hold down insurance costs, but it's premature to discuss them. The individual mandate -- which imposes tax penalties on those who don't buy insurance -- is the most effective formula, he said. "Massachusetts has the individual insurance provision, and the experience in Massachusetts shows it does work," Pollack said. It's estimated that at least 30 million uninsured Americans would gain health insurance under the law, 16 million as a result of the individual mandate. Pollack said that even without the individual mandate, the health-care legislation includes other provisions for extending coverage to millions of people currently without insurance. For instance, Medicaid eligibility will expand to include citizens and legal residents with annual incomes up to 133 percent of the federal poverty level -- about $14,850 for a single adult and $30,650 for a family of four in 2012. And federal tax subsidies will enable certain other people to buy coverage, Pollack said. It's estimated that Medicaid expansion would add 16 million people to the rolls of the insured. John Goodman, president of the National Center for Policy Analysis, which opposes the health-reform law, said he anticipates affordability problems with or without the individual mandate. "The mandate itself is pretty weak to begin with," he said. "I think people are overestimating its importance." While the provision calls for most American adults to obtain health insurance, people who don't earn enough to file federal income tax returns and many others are exempt, Goodman pointed out. "That's millions of people," he said. Goodman also said the penalties for not buying insurance are small compared to the price of insurance. That might tempt some people to "game the system" -- waiting until they're sick to buy insurance and canceling it when they're well -- "which will make it very expensive," he said. Enforcement of the individual mandate will be left to the Internal Revenue Service, Goodman said, adding he doubts the agency will pursue violators aggressively. Fines will be phased in until 2016, when individuals refusing to obtain insurance would pay $695 and families $2,085 or 2.5 percent of total taxable income, according to figures from the Henry J. Kaiser Family Foundation. For many people, that's a lot less than the cost of insurance, Goodman said. Although it varies by region and age, typical insurance premiums in 2016 are expected to average about $5,800 for an individual and $15,200 for a family of four, according to Goodman's analysis of figures from the Congressional Budget Office. "This whole approach is flawed," Goodman said. He suggested that the architects of the Affordable Care Act should have taken cues from Medicare. "If you look at Medicare Part B premiums and Medicare Part D premiums, provisions and methods are in place to prevent people from gaming the system." Pollack remains unfazed by that argument. If the penalties aren't strong enough, he said, "that can be corrected." The RAND Corporation, a nonprofit research organization, predicts that the cost of buying policies through new insurance exchanges would increase only slightly if the individual mandate provision were removed. (The exchanges will be created to help small businesses and individuals purchase insurance through a more organized and competitive market.) However, because fewer people would buy insurance if the mandate were eliminated, costs borne by the federal government would rise, the researchers said. Eliminating the individual mandate would cut the predicted number of Americans buying new health coverage in 2016 from 27 million to 15 million and increase an individual's cost of buying insurance by 2.4 percent, according to the RAND analysis. But Christine Eibner, an economist at RAND, said government spending for each person newly enrolled in a health insurance plan would more than double, reaching nearly $7,500 a person. "Without the individual mandate, the government would have to spend more overall to insure a lot fewer people," Eibner said in a RAND news release.