Senate Republicans Add Individual Mandate Workaround to Health Care Bill
It's one more way the GOP repeal bill resembles Obamacare.
Despite being billed as an Obamacare repeal plan, the health care bill released last week by Senate Republicans kept many of Obamacare's core elements in place, including federal regulations restricting health insurers from charging based on preexisting conditions and income-based subsidies for individuals purchasing health coverage on the individual market. But it lacked one of Obamacare's notable features—the individual mandate to purchase health insurance.
From a political perspective, this was not surprising. Republicans have spent the last seven years criticizing the health law's mandate. But as a matter of policy, it was an unusual decision: Over the last several decades, several states have attempted to implement preexisting conditions regulations without a mandate.
Every single one has seen their individual insurance market melt down in the space of a few years. With regulations but no mandate, people wait until they are sick to buy coverage, meaning that health insurers end up covering a smaller group of sicker people. This raises premiums, which pushes healthier people out of the market, which raises premiums further, and the cycle continues until premiums are unaffordable and insurers, unable to make money, leave the market: in other words, a death spiral.
This afternoon, Senate Republicans updated their health care bill, the Better Care Reconciliation Act (BCRA), to include a provision that is not a mandate, but is intended to act as a substitute for it. It's a backdoor mandate—a workaround designed to fulfill the same function. It's another sign of how much of Obamacare's individual market design Republicans have borrowed for their own bill.
Instead of a fine for going uncovered, as in Obamacare, the Senate GOP bill now includes a continuous coverage provision: Anyone who goes without coverage for more than 63 days must wait six months before getting coverage again. The goal, as with the mandate, is to create an incentive for health people to buy coverage and maintain it, by penalizing if they don't.
It doesn't take too much work to imagine how a provision like this might end up being weakly enforced, if only for political reasons. Obamacare already includes an open enrollment period, outside of which people are not allowed to buy coverage—at least in theory. In practice, there are numerous exceptions, and insurers have complained that those exceptions have allowed large numbers of people to jump on and off health plans throughout the year, obtaining coverage only when sick. In turn, insurers respond by raising premiums. If the six month waiting period goes into effect, it's likely to lock some sick people out of coverage, and the result could be the creation of loopholes that weaken the provision's effectiveness.
It's one of the many flaws inherent in the design of both Obamacare and the Senate bill: The political unpopularity of the mandate, and of mandate alternatives like this, makes it difficult to maintain the regulatory balance that is supposed to make the whole system work. In any case, it's one more way in which the health care bill put forward by Senate Republicans resembles a skimpier version of the bill it is supposed to repeal, and further evidence that Republicans aren't repealing the health law so much as putting their own awkward stamp on it.