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More Health Insurance Regs Without an Individual Mandate would Raise Health Costs

Les Masterson, for HealthLeaders Media, July 29, 2009

While stumping for healthcare reform, President Obama often trumpets the idea of more health insurance regulation. A topic he isn't as keen on mentioning is an individual mandate to require all Americans to have health insurance.

That was evident during his prime-time news conference last week in which he took aim at private insurers while remaining mum on requiring Americans to buy health insurance. The president, who opposed the individual mandate during his campaign, has not spoken as much about the individual mandate as he has about more health insurance regulation and the areas of improving quality, cutting Medicare Advantage payments, creating a public insurance option to make private insurers "honest," and bundling payments to hospitals and doctors.

Health insurers, led by America's Health Insurance Plans, say an individual mandate and added regulations go hand-in-hand. AHIP says it is willing to guarantee insurance for all Americans regardless of pre-existing conditions and stop using gender rating to charge women more for individual insurance. In exchange, they demand an individual mandate, which would mirror the Massachusetts model.

"Market reforms without a mandate are not sustainable in the long run," says Robert Zirkelbach, director of strategic communications at AHIP in Washington, DC.

Health insurers say the reason for the individual mandate is clear: The healthcare system would not work without an individual mandate if insurers are required to accept all members regardless of health status.

Justine Handelman, executive director for legislative and regulatory policy at the Blue Cross and Blue Shield Association in Washington, D.C., which is a national federation of 39 independent and locally operated Blue Cross and Blue Shield companies, says a three-pronged approach is needed:

  • A "strong and effective mandate"
  • A requirement that insurers accept everyone regardless of health status
  • Subsidies to help those who cannot afford health insurance pay for coverage

"Only with a strong individual mandate will we be able to keep premiums affordable in a guaranteed issue market. As state experience has shown, guarantee issue can only work if everyone—the young and healthy, as well as higher-risk individuals—purchases coverage. Otherwise, individuals will wait to buy insurance until they are sick and need coverage, which not only undermines the goals of reform but will drive up costs for everyone," Handelman says.

Health insurers predict adding health insurance regulations without requiring everyone to have insurance would simply pass costs from the new sicker members, who were not accepted previously because of pre-existing conditions, to other members.

Requiring everyone, most notably the so-called "young invincibles," who often don't buy health insurance because they don't believe they need it, would help offset the added costs of the new sicker members.

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