Ezra: "How does the individual mandate work?"

[Clio the Leo]

How does the individual mandate work?

So long as legal challenges to the individual mandate are in the news, we might as well be clear about what the mandate is, and how it works.

The individual mandate is a requirement that all individuals who can afford health-care insurance purchase some minimally comprehensive policy. For the purposes of the law, "individuals who can afford health-care insurance" is defined as people for whom the minimum policy will not cost more than 8 percent of their monthly income, and who make more than the poverty line. So if coverage would cost more than 8 percent of your monthly income, or you're making very little, you're not on the hook to buy insurance (and, because of other provisions in the law, you're getting subsidies that make insurance virtually costless anyway).

Most people will never notice the mandate, as they get insurance through their employer and that's good enough for the government. But of those who aren't exempt and aren't insured, the choice will be this: Purchase insurance or pay a small fine. In 2016, the first year the fine is fully in place, it will be $695 a year or 2.5 percent of income, whichever is higher. That makes the mandate progressive.

The theory behind the mandate is simple: It's there to protect against an insurance death spiral. Now that insurers can't discriminate based on preexisting conditions, it would be entirely possible for people to forgo insurance until, well, they develop a medical condition. In that world, the bulk of the people buying insurance on the exchanges are sick, and that makes the average premiums terrifically expensive. The mandate is there to bring healthy people into the pool, which keeps average costs down and also ensures that people aren't riding free on the system by letting society pay when they get hit by a bus.

The irony of the mandate is that it's been presented as a terribly onerous tax on decent, hardworking people who don't want to purchase insurance. In reality, it's the best deal in the bill...

http://voices.washingtonpost.com/ezra-klein/2010/03/how_does_the_individual_mandat.html

[Oregone]

1. "That makes the mandate progressive."

:rofl:

[Clio the Leo]

2. Highlighted that one JUST for you!

;)

[Oregone]

3. Thanks. Now I have to clean the coffee off my monitor

You guys are hilarious

[vaberella]

10. I get the feeling Ezra is under the bus. n/t

[Oregone]

12. He is just a kid singing on the bus

The pro-mandate crew is firmly behind him, and he is firmly behind this reform. His eternal optimism has secured him a lifetime of fans, and a lifetime of lucrative employment.

[vaberella]

13. Understood. n/t

[zipplewrath]

9. They're being technical

The mean in a progressive versus regressive tax. Although even then I'd argue because the only real folks "threatened" by this are either the very poorly employed, or the extreme wealthy. For the poorly employed, it will be a significant sum. For the wealthy it will be a minor annoyance. There is nothing progressive about the application, only the calculation of the tax.

[Oregone]

11. Yes, I was considering the aggregate effect and the system they were being mandated to

Rather, of course, the actual tax.

And...well, is it "progressive"? Sounds more like a "flat tax", rather than one that uses marginal rates and steps up depending upon how much you make.

[quakerboy]

30. Worse than flat tax, this is mildly regressive

At least, by my understanding.

2.5%, or $695, whichever is higher. Which means that below 27,800 you actually pay a higher percentage of your income. At 20k, you are up to 3.5%

I will grant you there seem to be subsidies available that should make this a non issue. But I am sure there are situations that will fall through the cracks for one reason or another, as there always are.

[FSogol]

4. K & R. n/t

[dkf]

5. Being forced to buy insurance from crooked tricksters is a deal!

And black is white and up is down.

I love these Orwellian tactics.

Insurance isn't a good deal it's a rip off. But we purchase it on the offchance we are dying.

[Bluenorthwest]

6. Just really amazing how dishonest this is

Progressive? That is just hilarious. Here is Obama when he was asking for the job:

"The reason she (Clinton) thinks that there are more people covered under her plan than mine is because of a mandate. That is not a mandate for the government to provide coverage to everybody. It is a mandate that every individual purchase health care.

And the mailing that we put out accurately indicates that the main difference between Senator Clinton's plan and mine is the fact that she would force, in some fashion, individuals to purchase health care."

[Oregone]

8. Yeah, I mean, how do you have any credibility after bending yourself back-wards on this one?

[quakerboy]

31. Do ya ever wonder who is really running things?

Its these odd coincidences that make me wonder.

[LiberalFighter]

7. What is the projected savings for those that receive employer provided insurance?

[grahamhgreen]

14. This guy is well-spoken, however his arguments are completely inane.

[optimator]

15. Rahm's check to Ezra must have cleared

no one should really take this dipshit seriously.

[grahamhgreen]

16. "it would be entirely possible for people to forgo insurance", there is no evidence to support this.

"Now that insurers can't discriminate based on preexisting conditions" BS - Or what are the consequences?

[lumberjack_jeff]

17. There's no evidence? Really?

Then what's with all the bitching about mandates?

Absent a mandate, a law that outlaws "preexisting conditions" will do exactly that; encourage people to forgo insurance until they need it. So long as you can sign an insurance form from the hospital bed, you can defer insurance until you're sick... and stop paying the premium as soon as the illness has passed.

... until next time.

[grahamhgreen]

18. Please cite one study that shows that people will forgo insurance and do what you are suggesting.

[lumberjack_jeff]

20. There's no need for a study. Read up on the purpose of insurance.

Insurance is risk management. If your bills will be paid by insurance whether you pay premiums or not, then there is no risk, and thus no need for indemnity.

There's no more need for a study on this than there is a study on the phenomenon of people seeking food when they're hungry.

In general, people will behave in an economically rational way. It's irrational to buy insurance if you can wait to purchase it until disaster strikes.

Here's a better example. Life insurance sold without regard to preexisting conditions. What would be the appropriate premium for life insurance purchased on behalf of an already-dead person?

[grahamhgreen]

25. Your argument hinges on your belief that "people will behave in an economically rational way"

This is only your personal belief and although it may be true for some - especially health insurance CEO's - this is not the driving force of humanity.

It is not "economically rational" to lay your life on the line for your children, your family, your friends or your country, yet most of us will.

Therefore, until I see a study that shows that people will not buy insurance that has a pre-existing exemption unless they are mandated too, I will reject that assertion. Some will, but it will be a minority, and nothing that big insurance can't handle. Indeed, if they are unable to compete in this scenario, we can simply institute single-payer, which is truly the most economically rational system.

In fact, for-profit health insurance is fundamentally economically irrational - except for the CEO's of big insurance.

If we follow your principal of economic self-interest, then big insurance will simply take the trillions that are mandated to them, and use it to fight on a case by case basis against the weak reforms in the bill, as well as bribe congress to repeal the reforms. Since there is a pattern and a practice of behavior on their part - as well as corporate charters that tell them to be as greedy as possible - they will behave as you said.

Your average person on the other hand, will most likely buy the insurance and be covered; there are no studies to suggest otherwise.

[lumberjack_jeff]

26. Would you buy insurance on your new car if the policy covered preexisting damage?

I wouldn't. I'd buy it after the wreck. That is especially true when the premiums are high because everyone else is doing what the policy encourages you to do.

[grahamhgreen]

29. The real question is - If we give big insurance trillions, will they really cover pre-existing

conditions or will they use the money to get rid of the regulations?

[SKKY]

19. And here's another dirty little secret the Republicans don't dare let out...

...The Wyden-Bennett bill also has mandates.

[Cha]

21. Hey thanks!

[Cleobulus]

22. Notice the terminology, coverage is NOT care...

if getting coverage costs more than 8 percent of your income, then you will be exempt. Fine, but what if getting health care will cost 25% or more of your annual income if and when you use that insurance, what then. What good is coverage if you can't use it?

[bornskeptic]

23. If your out-of-pocket costs are over 25% of your income,

when you have insurance from the exchange, then your medical bills are almost certainly more than 100% of your income. How would you pay those bills without insurance?

[Cleobulus]

24. I wouldn't, with or without insurance...

At a certain point, the amount simply doesn't matter when you owe too much at your income level. Its a simple matter of, well, either pay the hospital, or eat, I would choose food, personally. Call it the financial limit of diminishing terms. If I can't pay the maximum out-of-pocket expenses with insurance, what would it matter if it were more without insurance, either way, I couldn't pay it, so, for all practical the actual amount of money is moot.

[DatManFromNawlins]

27. So you can't afford health CARE either way

Nice. The government subsidizes an insurance company, and you still can't afford the care you need.

[greencharlie]

28. so is it true?

then that you could just pay the fine every year and if/when you DO get sick... just buy a new policy at the hospital?

[jeanpalmer]

32. SEC. 2708. PROHIBITION ON EXCESSIVE WAITING PERIODS

"...a health insurance issuer offering group or individual health insurance coverage shall not apply any waiting period (as defined in section 2704(b)(4)) that exceeds 90 days."

[quaker bill]

33. you have to connect the dots

The exchange is exactly not throwing individuals upon the tender mercies of the insurance raptors. It is a highly regulated marketplace for massive, nationwide, group insurance. Providers will have to supply a specific, standard, and known set of benefits subject to mediation and appeal. Failure to perform to specifications will lose them access to this large market. Beyond this, they must also compete in this market, head to head, with a non-for-profit provider.

Being required to buy insurance from a non-profit provider is very little different from being taxed and having the coverage purchased / provided for you, except that under this plan, you get to pick from a limited range of options. If you have problems with insurance companies making massive profits from health insurance, I would recommend the non-profit model, when it becomes available.

[jeanpalmer]

34. If a person makes $45,000 a year,

owns few assets, and is relatively healthy, and the choice is between paying $3,000 a year for insurance with a 60% actuarial value or paying a $413 penalty in 2014 ($826 in 2015, and $1032 in 2016), how many people will decide to forego the insurance and save between $2,000 and $2,600? I'm thinking, quite a few. He/she would save $21,000 over ten years, minus out-of-pocket health care costs. That's a nice chunk of change, could buy a new car. If a person is making $40,000, he's probably just paying the bills/making ends meet. So foregoing the insurance and saving 2 grand a year could make sense for him. Insurance companies, for what it's worth, have already stated that the penalty is not high enough to force enough people to sign on for insurance to create an adequate pool. And since the penalties go to the government and not to insurance companies, they won't be available to drive down premium costs. So premium rates could rise even with mandates

[DailyGrind51]

35. The same people who are irate about "individual mandates",

are the same people who talk on cell phones in movie theaters. They believe that their individual rights are more important than those of the rest of society.