Next Step for the Slacker Mandate
Consumer Power Report #330
One of the aspects of Obamacare the administration has seen fit to highlight repeatedly is the so-called “slacker mandate,” which allows individuals up to age 26 to remain on their parents’ health insurance plans. Analysis by the Commonwealth Fund has found the mandate to be particularly popular, with millions of young adults heading back onto their parents’ plans.
But a new analysis from the Joint Economic Committee finds, “A closer examination of the costs of this new government mandate reveals it may not be the panacea supporters have claimed.” It turns out that up to 4 million of those to move onto their parents’ plans had access to other forms of coverage. The full report is available here.
Impact on Costs: In its interim final rule implementing the under-26 mandate, the Administration claimed the provision would impose transfer costs of $3.5-$6.9 billion annually, and would raise premiums by 1 percent per year. However, a George Mason University study released in January found that the Administration omitted several key components in its regulatory impact analysis for this rule, understating its cost, potentially by billions. Given an average premium for employer-sponsored insurance of $15,073 in 2011, an under-26 mandate raising costs by 1 to 3 percent would increase premiums by $151 to $452 per year. Conservatives have frequently criticized Obamacare for raising health insurance premiums, in direct violation of candidate Obama’s promise to lower them. Even the Administration admits that the under-26 mandate has led to higher premiums for businesses and families.
Impact on Coverage: While many press reports have focused on the “children” obtaining coverage thanks to the under-26 mandate, fewer have examined how many individuals have lost coverage due to the federal requirements. However, studies suggest these numbers are not insignificant. For instance, multiple studies have suggested that every 1% increase in premiums increases the number of uninsured by approximately 200,000-300,000 individuals nationwide. With the under-26 mandate raising premiums by at least 1%, and potentially much more for some plans, it is reasonable to conclude that hundreds of thousands of individuals have lost coverage – because they were priced out of the individual market, or because their employers decided to stop offering coverage – as a result of the new requirements. These newly uninsured individuals represent what authors William Graham Sumner and Amity Shlaes famously referred to as the “Forgotten Men” – the individuals suffering harm as a result of government intervention.
Meanwhile, the mandate would turn one of the health market’s few remaining natural incentives on its heads, discouraging young adults from purchasing insurance for themselves. Instead of mandating that health insurance plans include family coverage for adult children, policy should encourage all young adults to purchase an individual health plan that they can afford and keep throughout their lives.
What’s more, the question arises: Is the slacker mandate even necessary? UnitedHealth announced today that it would provide such a policy even in the absence of the mandate’s existence, should the Supreme Court strike down President Barack Obama’s law. As Avik Roy notes:
It’s very likely that other insurers will move in the same direction. “I don’t think you can go back and say, ‘You know the 26-year-old you have on your policy? They can’t be on there anymore,’” says Aetna CEO Mark Bertolini. “There are certain things that I would say are metastatic to the system already and not worth going back.” Humana CEO Michael McCallister agrees: “I’m not sure anybody’s going to want to basically let all of that go away.”
It’s not shocking that insurers would want to continue to write these policies. Covering young people, who rarely require health care, is good business for insurers. In a truly free market, where individuals buy health plans for themselves, such policies would succeed or fail based on the degree to which families believed that the extra coverage offered real financial value.
We don’t have that free market yet. But UnitedHealth’s leadership should encourage Congressional Republicans to seek voluntary, rather than coercive, solutions that bring more young people into our health care system.
Here’s a perfect example of why government is the cause of our problems within the health care space, even beyond the reality-warping policies of our tax code and our health care entitlements. Mandates drive up the cost of care for everyone--instead, insurers should decide for themselves whether to offer this as an aspect of their product in response to public demand. And they would, if the families involved, not the government or the employer, were the primary purchaser of insurance.
-- Benjamin Domenech
IN THIS ISSUE:
The winner of the Pioneer Institute’s Better Government Competition is this new paper from Grace-Marie Turner of Galen and Robert Helms of AEI.
Grace-Marie Turner and Robert Helms served on the federal Medicaid Commission from 2005–2006, attending more than 14 hearings. In many of them, patients and state officials testified about the need for better-coordinated care for dual-eligible patients. We heard numerous examples of state experiments that provide better care and lower costs and were convinced that policy changes are needed to facilitate more such programs. In this paper we outline the changes that would be required in federal programs and financing to facilitate improved systems of care for millions of the most vulnerable patients on the Medicaid and Medicare programs.
Some of the ideas that we offered in the initial policy proposals, which we summarize below, have been adopted in an early demonstration program by the Medicare-Medicaid Coordination Office at the Centers for Medicare and Medicaid Services. One of our fellow commissioners from the Medicaid Commission, Melanie Bella, is the new director of the Office and is very familiar with our policy recommendations.
So far, 25 states, including Massachusetts, have notified Washington they are making plans to participate in the new federal demonstration program which Ms. Bella is directing to facilitate integrated care for dual-eligible beneficiaries. The goal is to develop “person-centered models that promote coordination missing from today’s fragmented system.” (A meeting was held in Boston on February 16, 2012, to discuss the specifics of care coordination.)
While describing the details of the new federal program is outside the scope of this paper, we will describe our larger vision for care coordination, components of which are being implemented by the Medicare-Medicaid Coordination Office. We outline our vision and the core recommendations for changes in federal health policy which we believe will allow dual-eligible patients to get better care by giving states more resources and flexibility involving their care. Much work remains to be done.
SOURCE: Galen Institute
Congratulations, taxpayers--you’re subsidizing this whether you approve or not.
While hundreds of Connecticut residents rallied in New Haven against abortion and federal requirements that religious organizations cover their employees’ contraceptives, officials at the State Capitol complex took up a measure on whether the insurance everyone will have to purchase under the federal health law will cover the procedures.
The panel unanimously decided that abortion is an essential benefit, and it will be covered in the plan they select.
“This issue is favorably resolved for all women now in Connecticut,” said Jennifer Jaff, executive director of the group Advocacy for Patients with Chronic Illness and a member of an advisory committee of the Insurance Exchange Health Plan. “Stripping women of elective abortions is not a tenable option.”
Starting in 2014, all health plans nationwide must cover certain essential health benefits, and each state will determine how far those minimum levels of coverage will go. In Connecticut, every private health insurance plan already covers elective abortions, said Victoria Veltri, the state’s healthcare advocate. However, for this new essential benefits plan, the state must create a model – using the state employee plan, the federal employee plan or a private plan – for what is required to be covered.
Had the state selected the federal employees’ health plan, which does not cover abortions, then business and individuals who purchased this essential benefits package would not receive abortion coverage. Whether abortion coverage is an essential benefit is likely to spark lively debates throughout the country as other states decide – as they must by the end of the summer – which plan they will choose.
Connecticut is ahead of others on making this decision, members of the state panel said Friday.
“It’s a matter of health. We wanted to protect a woman’s right to chose,” said Veltri. “I didn’t suspect that this would be an issue here.”
Others thought there would at least be some pushback.
“I was surprised that that was so easy,” Robert McLean of the Connecticut State Medical Society told Jaff after the vote. No one spoke during the public comment portion of the meeting.
SOURCE: Ct Mirror
Even for those who want to implement them.
People involved in planning Delaware’s exchange last year expected that Democratic Gov. Jack Markell would issue an executive order to start up an exchange with little fuss. But based on past efforts to expand insurance coverage in the state, there was always a concern about whether there would be enough people to make the exchange viable.
“We’d prefer to have our own but we started looking at the numbers,” said Richard Heffron, senior vice president of government affairs for the Delaware State Chamber of Commerce and a member of the Delaware Health Care Commission. “It’s an obstacle we’ve had for years when we’ve talked about some sort of statewide health system.”
HHS offered the partnerships -- in which the state runs part of the new insurance marketplaces created by the health law and the feds run the rest -- once it became clear as many as 35 to 40 states may not be ready to do it on their own by Jan. 1, 2014. That’s partly because setting up exchanges is technically complex and partly because many states have moved slowly, if they’ve moved at all, because of the political and legal uncertainties surrounding President Barack Obama’s health law.
But for some smaller or sparsely populated states, the partnership model is just about the math. Instead of too big to fail, some are just too small to succeed.
Delaware has been communicating with other small states trying to figure out how to make their exchanges financially sustainable. The efforts include a December summit that HHS’s exchange office ran for low-population states, including Hawaii, Montana, New Hampshire, North Dakota, Rhode Island and Vermont, as well as Washington, D.C. Three of those states and the District have all approved exchange legislation indicating their intention to have a state-based exchange.
Most states continue to be in a holding pattern waiting for the outcome of the Supreme Court case regarding Obama’s law.
Thanks to the elimination of low-cost, low-benefit plans:
The demise of low-cost, low-benefit health plans for students is a consequence of the 2010 health-care overhaul. The law is intended to expand coverage to tens of millions of uninsured Americans, but it is also eliminating some insurance options.
Many students already have coverage through their parents and aren’t affected by the changes. Parents who get insurance from an employer have traditionally been able to enroll dependents on their plans up to the age of 22 if they are full-time college students, and about two-thirds of students have that kind of coverage, according a 2008 study by the Government Accountability Office. The health-care law has since increased the age at which children can be on their parents’ coverage to 26.
Around 600,000 students, about 7% of the total number of 18-to-23-year-olds in college, bought their own insurance, generally plans arranged by schools for which students pay all the premiums, the GAO study said.
Bethany College in Lindsborg, Kan., this past year offered a 12-month plan that cost students $445, while capping payouts at $10,000. For the 2012-13 academic year, the Obama administration said the payout cap must be at least $100,000. Bethany said students would have had to pay more than $2,000 to get that new level of coverage.
“We decided not to offer coverage for our students next year given the proposed increase in premium,” said Bob Schmoll, Bethany’s vice president for finance.
SOURCE: Wall Street Journal
Emails and documents from behind the scenes:
The House Energy and Commerce Committee released its latest report into the backroom dealings behind Obamacare on Friday. This report, as well as a memo released the previous week, and the supplemental documents related to each report, provide for an interesting read, on multiple levels.
It is of course interesting to learn precisely how candidate Obama went from criticizing Big Pharma’s CEO for exerting improper influence in a 2008 campaign ad to cutting a “rock-solid deal” with the very same executive he had earlier criticized. It’s just as ironic to find a President who pledged to televise all health care negotiations on C-SPAN cutting legislative deals behind closed doors. And perhaps the piece de resistance is the way the Administration endorsed the creation of secret advocacy groups designed to run pro-Obamacare ads – the same kind of “shadow groups” that President Obama has repeatedly criticized as being insufficiently transparent.
But over and above the irony – and hypocrisy – readily apparent in these documents lies a simpler yet more profound truth: Practically every health care group in Washington SUPPORTED Obamacare, and moved heaven and earth to build public support for the law, yet the American people OPPOSED it – and still oppose it to this day …
A separate study from Bloomberg Government released late last week demonstrated just why all these special interests were so keen on passing Obamacare. The study found that a Supreme Court decision striking down the law could cost pharmaceutical companies, hospitals, and other health care interests as much as $740 billion in revenue over the next ten years. Hospitals alone could lose $430 billion. Coming on the heels of last month’s study indicating insurers benefit from Obamacare to the tune of $1 trillion, the Bloomberg report illustrates perfectly why all the health care special interests were desperate to pass the law – as the Energy and Commerce documents reveal.
SOURCE: Jim DeMint