Health Insurance Plan’s “Individual Mandate” Not Well Communicated by Government and Media


The biggest objection to the new federal health insurance plan is its requirement that everyone buy health insurance. A poor job has been done of explaining why this is true. This basic educational task should have been better addressed through public relations by the Obama administration. One could also blame the media for not covering this issue in simple, clear ways that everyone can understand.

Today’s New York Times has an article about an MIT professor, Jonathan Gruber, who convinced both the Massachusetts government under Governor Mitt Romney and the Obama administration that it was imperative to their health insurance plans to require that everyone buy health insurance. He showed calculations to demonstrate a “terrible spiral:”  when healthy people can opt out of the plan, it leaves the relatively sick in the plan. This causes costs for premiums to rise, which in turn causes the least sick to drop coverage, sending costs even higher, and making healthcare unaffordable to all but the wealthy.

I’m not sure why this issue hasn’t been well-explained. It’s not that complicated. I’ve done it here in eight steps that a child should understand:

  1.  Health insurance companies use the income from premiums to pay for healthcare.
  2. If everyone participates in a health insurance plan, whether young or old, healthy or sick, the premiums paid by the young and healthy subsidize the costs of healthcare for the old and sick.
  3. If the young and healthy can opt out of the plan, the premiums they would have paid are no longer available to subsidize the healthcare costs of the old and sick. Therefore, in order to stay in business, the health insurer must charge larger premiums to the old and sick.
  4. The increased cost of premiums then force the healthier sick people to opt out of the plan because they can no longer afford the premium costs.
  5. That sends costs up even more, leaving the really sick and very old in the plan. Their costs of healthcare will then become higher still.
  6. This is the downward spiral that makes health insurance less viable as time goes on unless everyone is covered.  Only two things can prevent this downward spiral:
  • If everyone is required to pay for health insurance, the cost burden isn’t just on the old and sick. Some say this is unfair to the healthy, who are forced to subsidize healthcare for the sick.  They should remember that at some point, we all become old and sick.
  • The only other way of preventing the downward spiral is to withhold healthcare from those who don’t pay premiums.  Of course this won’t happen, because as a society we feel a moral obligation to provide at least a minimal level of healthcare whether or not people are insured. Emergency rooms don’t turn away victims of car accidents just because they don’t have health insurance.

7.  Therefore, without a mandate that everyone must be covered, the downward spiral makes health insurance cost increasingly more, so eventually it becomes unviable for all but the wealthy.

Actually, this is happening in the U.S. right now. The number of uninsured has grown to one out of six Americans. As costs for health insurance have grown, companies have cut back, shifting costs to employees. This, as well as the high number of uninsured unemployed, has led to annual growth in the number without health insurance coverage.

Health insurance premiums on average have doubled since 2001. Americans pay a larger percent of their own healthcare costs than people in any other industrialized country in the world.

As costs go up and less people receive preventative care, Americans’ health grows worse, which causes costs to go even higher.

Is this simple enough to understand?

Lucy Siegel

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