The Exchanges, the Mandate, and the Opt-Out.

I’ll be saying more about this in my column on Tuesday, but as this new uprising among progressives like Howard Dean, Markos Moulitsas, and Keith Olbermann against the health-care bill has emerged, much of the fire has been directed at the individual mandate, the requirement for everyone to be insured. This often takes the form of “people are going to be forced to buy crappy insurance from evil insurance companies, and they won’t have a public option.” While the last part is true, and the second part (about the companies being evil) is basically true, there are elements to the first part that haven’t been addressed enough.

Let’s remember that those who will get coverage but are now uninsured will come in a couple of flavors. If their incomes are low enough, they’ll be able to enroll in Medicaid (government health insurance!). Some of them are young people, who if they’re under 26 in the Senate version or 27 in the House version, will be able to stay on their parents’ insurance. The rest will be enrolled via the health insurance exchanges.

So if you’re going to argue that people will be forced to buy crappy insurance, you have to address the specifics of the exchanges (or one national exchange, if the House has its way). And while the exchanges aren’t perfect, they are most definitely not crappy. In the exchanges, insurance companies won’t be able to deny you coverage because of your pre-existing conditions; they won’t be able to rescind your policy when you get sick; they won’t be able to cut you off after you reach a “lifetime cap”; and if they want to raise your premiums they’ll need to get the approval of government regulators. If you're of low or middle income, you’ll also get a subsidy to help pay for it. All those things are vast improvements over what people now face in the individual market.

But there’s still a potential political problem, which is that people just don’t like the idea of being mandated to buy something, and that forcing them to do so could result in a backlash. Unfortunately, it has appeared that there’s just no other way to get everyone insured and expand the risk pool, which is necessary to keep premiums from exploding. So the people who wrote the bill felt they had no choice but to impose fines on those who don’t get insurance.

TAP’s own Paul Starr, however, came up with a solution to this problem: an opt-out to the individual mandate. As he explains here, this is the way it would work:

So here's the proposal (which is derived from a similar provision in the German health insurance system). If people didn't want to buy insurance, they could take an opt-out by agreeing that they would not be able to come back into the subsidy system for five years. In other words, instead of paying a fine for failing to insure, they would forgo a potential benefit. For five years they would become ineligible for federal subsidies for health insurance and, if they did buy coverage, no insurer would have to cover a pre-existing condition of theirs.

The choice would then rest with the individual, and very few people would be likely to take it. Last night, in criticizing the mandate, Keith Olbermann noted that he is “self-insured,” and doesn’t want to be mandated to buy coverage. Many large corporations self-insure, and I guess if you make millions of dollars hosting your own TV show, you can do the same. But most people don’t have that option. People who are now criticizing the mandate ought to address not only what they think is wrong with the exchanges, and whether Starr’s opt-out would solve the problem they see.

-- Paul Waldman

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