Tweet
It is basically the position of the Obama administration that the group health insurance market currently “works.” Administration officials have repeatedly stated things to that effect, and this is why the Affordable Care Act doesn’t change much about the group market. This creates a logical problem for the administration when it tries to argue that the individual mandate for the individual market can’t be severed from the ACA’s main new consumer protections, such as guaranteed issue and community ratings.
These consumer protections are already common in much of the group market, but the group market doesn’t currently have an individual mandate, even though it still “works.” The experience of the group market proves it is not the individual mandate that prevents an insurance death spiral; it’s the subsidies.
The way most of the group market works is that employers in effect offer employees the chance to buy highly subsidized health insurance. The subsidy comes from the fact the tax code makes employer-provided health care benefits tax free. If an employee elects to take the employer-provided health insurance, they get insurance; if they don’t choose the insurance, they lose the value of that benefit.
For the most part these subsidies/employer contributions are large enough it make financial sense for the vast majority of people to accept the employer-provided insurance. Even without a mandate the vast majority of employees choose to buy their employer-provided insurance anyway, because the subsidies make it the smart financial move. Very few people try to game this system by not getting their employer insurance until they get sick, thanks to open enrollment periods.
Supporters argue that the individual mandate is the only way to get enough people to buy insurance to make the consumer protections viable, but that requires completely ignoring the supposedly working group market in the United States. The individual mandate just makes it marginally cheaper, but “it is slightly cheaper” is not a very solid constitutional argument.
15 Comments
Support this site!
Subscribe to the newsletter
Advertise on Firedoglake
Send
us your tips
Make us your homepage
About FDL Action
You can be sure of one thing: when the insurance companies realize that there is subsidy, they are just going to increase rates. There is never a bad reason to raise rates. Does anyone trust insurance companies to restrain their greed? I certainly don’t. We are simply going to go from one crisis to another. Plus, the fact that you have to buy insurance means that there will be no place to go except into the pen to be picked clean. And all this with government approval. The rates are not going down, you can be sure of that.
This issue (secure provision of health care to the population) will not be resolved until the word “insurance” is no longer used in the context of this issue.
Sounds like a good argument for replacing the Mandate with an Itemized Deduction on Taxes for people who purchase individual policies….might provide enough competition for the employer subsidy to move everyone onto individual policies (which fixes a lot of problems)….
It’s too bad that Anthony Weiner “shot himself in the foot” and blew his congressional career. He was the most forceful member of the House in railing against the uselessness and the unnecessary need for a health insurance industry. They provide NOTHING to the consumer. Rates aren’t going to go down, and medical care itself will continue to rise. The only winners in all this will be the insurance company stock holders. The ACA is a band aid. The whole system is unworkable and in need of a total overhaul.
The US ALREADY spends twice as much per capita on healthcare as Sweden, Canada, UK, Switzerland etc.
The question isn’t where are we going to get the money to provide ADEQUATE care to everyone, it’s “Where the FUCK is the money GOING?”
Look to the skiving, no value-adding, extortionist CROOKS in the INSURANCE industry, and get them OUT of the picture. It’s going to be a bloody extraction, but I won’t be crying if the CEO of Cigna has to live on the measly takings
he’s already acquired, and neither should anyone else.
TYPO ALERT — Last line of 3rd graph:
Lose, not loose.
Otherwise, fine work as usual.
Individual policy premiums are already an itemized deduction. I know, because the last year before I qualified for Medicare I wrote off nearly $10K in premiums.
Anthony Weiner could rail against the insurance companies because he got lots of his campaign money from other sources. Complete phony sack of shit, who incidentally, voted for the ACA.
Thank you fixed
Amen brother. The Insurance moguls are just another huge Vampire squid attached to the face of every American. That our pols are nothing more then their shills is somewhat our fault.
Anthony who?
If lack of an individual mandate purchase insurance would send plans into a “death spiral”, as the Obama administration and others suggest, why hasn’t that happened in Pennsylvania?
Blue Cross / Blue Shield (still a non-profit here) offers guaranteed issuance individual health insurance polices across the state of Pennsylvania. There are no limitations on coverage of pre-existing conditions. For a 40 year old, non-smoking male, an 80% coverage policy (most diagnostic and preventive care is covered at 100%) with an annual out of pocket maximum roughly in line with ACA requirements the monthly premium is around $400. 100% coverage plans are also available, but cost as much as 50% more.
While this insurance is expensive, and out of reach for many with modest incomes, it is available to all and premium increases in the last decade are comparable to increases to all individual policies nationally.
If the “death spiral” of only only the very sick signing up for individual plans was a real, demonstrable possibility, why hasn’t it happened in Pennsylvania with individual plans available for a decade or longer?
All the mandate does is deliver millions in to the maw of a predatory, capricous system that makes its obscene profits by DENYING coverage not PROVIDING it. And even with Obamacare saying that coverage can’t be denied for pre-existing conditions, the premiums will be out of reach to all but the super wealthy.
The other thing I have learned by reading FDL is that employers are going to start ditching employer paid/negotiated premiums for a set fee that their employees will receive and then they have to go out and buy health insurance for themselves, negating the advantage of a large bargaining pool to reduce per employee premiums.
It was so naive of Obama and his bubble dwelling lackeys in DC to think that all of this folderal over Obamacare is mostly likely going to be chucked in the trash. The Scalia Court doesn’t rule by law or precedent, it now makes law above Congress and the Presidency.
Was it worth losing 70 seats in the House for zero gain and the galvanizing momentum this is going to set in motion for a demoralized Republican party to rally now? Dumb. Dumb Dumb
The real issue here is whether the Supremes are willing to give Obama a victory at the cost of actually ruling in favor of consumers for almost the first time in this court’s history.
The insurance companies are salivating at the prospect of having the entire American consumer market captive, but that would mean a victory for the hated Obama.
If it weren’t for the millions of lives at stake here, this dilemma would be hilarious.
Remember that a National Health system Like Britain’s was never discussed and that Obama took Single payer off the table from the beginning, along with negotiated drug prices. Then when the public option looked like a real possibility, he, Reid and Pelosi killed it dead.
Kucinich called it “The Health Insurance Companies Protection Act” (then voted for it a week later), so striking this law would be their most pro consumer action ever. And this is a court that almost never rules in favor of consumers.
Thank you, Jon! People keep making the adverse selection death spiral argument for the mandate: “OMG people will wait until they’re sick to buy insurance unless there’s a mandate OMG!!!”. But 85% of the country is covered, and at least half of them are on private group or employer-based plans. Most of the people currently covered are not at death’s door so it’s likely that they are covered because the coverage offered to them is a smoking deal. When I worked at a large corporation that offered both a generous health plan and a robust 401K/profit sharing/stock participation plan I saw a large number of the young invincibles opt out of the investment stuff because they’d rather have the money in their pockets. But no one opted out of the health insurance, because it was excellent and heavily subsidized.