One of the sticking points over this bill, now that the public option has been removed, is the individual mandate. Many progressives simply don't want to require people to buy a product from a private corporation, particularly one that enjoys anti-trust exemptions.
Personally, I support a mandate, because I have not seen anyone indicate to me how the system will support community rating and other insurance regulations without some kind of mandate to ensure that people don't opt out and worsening the risk pool. But don't take my word for it. Take Krugman's, from back when Hillary championed mandates and Obama didn't. (And I, though a Barack supporter, thought Hillary's the better plan.)
Still, I understand why people dislike the mandate. As Obama pointed out during the campaign, even with subsidies, it may be a real burden for many people. And a hardship exemption can only go so far. Moreover, many people - left, right, and center - oppose viscerally being told they must purchase health insurance.
So what do people think about Paul Starr's proposal? He proposes that people be able to "opt out" of the mandate, but in doing so forgo subsidies and some of the regulatory protections if they opt back in.
What would this mean? Starr explains:
The bills in Congress would impose a fine on people who decline to buy coverage after the system is reformed, unless they have a religious objection to medical care or demonstrate that paying for insurance would be a financial hardship even with the new subsidies being provided. Under the Senate bill, the fines per person would begin at $95 in 2014, rising to $750 two years later. The House bill sets the penalty at 2.5 percent of adjusted income above the threshold for filing income taxes, up to the cost of the average national premium.
The trouble with the fines is that they communicate the wrong message about a program that is supposed to help people without insurance, not penalize them. Many people simply do not understand why the government should fine them for failing to purchase health coverage when it doesn't require people to buy other products.
The rationale for the mandate is that it is necessary to carry out the other reforms of insurance that the public overwhelmingly approves -- in particular, ending pre-existing-condition exclusions by insurance companies. If legislation banned those exclusions without a mandate, healthy people would rationally refuse to buy coverage until they got sick, and the entire insurance system would break down. The mandate is designed to deter people from opportunistically dipping into the insurance funds when they are sick and refusing to contribute when they are healthy.
But Congress could address this problem more directly. The law could give people a right to opt out of the mandate if they signed a form agreeing that they could not opt in for the following five years. In other words, instead of paying a fine, 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 idea for this opt-out comes from an analogous provision in Germany, which has a small sector of private insurance in addition to a much larger state insurance system. Only some Germans are eligible to opt for private insurance, but if they make that choice, the law prevents them from getting back at will into the public system. That deters opportunistic switches in and out of the public funds, and it helps to prevent the private insurers from cherry-picking healthy people and driving up insurance costs in the public sector.
How do dKos'ers feel about this?
I imagine it's the kind of proposal that would need to be very carefully tailored, both to allow people to opt out without unreasonable burdens, without making the burden so unreasonable that huge numbers would opt out. A system where only a relatively small number actually choose to opt out could avoid most of the major adverse selection issues. A system where large numbers do so defeats the purpose of the mandate in the first place.
My suggestion would be to say that most of the insurance regulations would still apply to you if you opted out but chose to opt back in. I would, however, keep people from receiving subsidies for five years if they opt back in.
Separately, Starr suggests that for children, there be default enrollment in SCHIP or Medicaid if their parents opt out.
The law ought to treat children, however, differently from adults. Just as there is a public interest in assuring that children receive an education, so there is a public interest in seeing that children receive health care. Instead of providing a five-year opt-out for children or imposing a fine on their parents for failing to cover them, a default program should cover any child who isn't otherwise registered for private or public insurance. That default program could be the State Children's Health Insurance Program or Medicaid; whether the parents owe any money for that coverage should be dealt with as part of the income tax.
Is this the way to appease those who dislike a mandate, while allowing the insurance regulations to work?