New Mandates Ordering Health Insurance In US

In the autumn of 2007 Laura Allen didn't think Massachusetts' law requiring everyone to have health insurance would affect her life. She had a customer service job at a rubber stamp company that provided coverage. But then the 42-year-old was told she would be laid off before the end of the year. And the new state law imposed a $200 tax penalty on anyone uninsured on Dec. 31, 2007

The prospect of being unemployed and uninsured was stressful for Allen. She couldn't afford the $1,400 monthly COBRA premiums for herself and her husband. So she called the Connector Authority -the body managing the state's comprehensive health reform program- several times for help enrolling in health insurance. She couldn't get through because the Connector phone lines were overwhelmed by residents trying to do the same thing. "It was frustrating," said Allen.

Eventually, things worked out for Allen. On Nov. 5, 2007, she began work as a receptionist at an electrical supply company that would offer health insurance in two months -- just after the deadline. Her company let her enroll five days early so she could avoid the tax penalty. A Commonwealth Connector spokesman said Allen could have applied for a hardship exemption.

Allen, like many others in Massachusetts, found herself on the front line of an experiment in personal responsibility -- the individual health insurance mandate.

Since the Massachusetts effort began in 2006, many lawmakers and policy experts have embraced individual mandates as an integral part of health system reform. Several states -- most notably California -- have considered legislation with a Massachusetts-style insurance requirement. So far none has adopted the measures. Some states are considering mandates for higher-income residents only, which parallels AMA policy.

At the federal level, at least one lawmaker has introduced a bill with an individual mandate. Both Democrats running for president include required insurance in their health system reform plans.

The idea behind these proposals is that reform won't work unless everyone is personally responsible for getting insurance. The theory is that requiring everyone to have coverage lowers its cost. Premiums would drop as medical risk is spread across the population, and health care costs would decrease because uncompensated care would decline, said Jonathan Gruber, PhD, professor of economics at the Massachusetts Institute of Technology and a member of the Connector board.

Mandate proponents note that an insurance requirement doesn't mean much unless affordability is directly addressed. The questions that arise include how much to subsidize coverage for low-income people, what benefits to mandate, and how to reform the health insurance market.

Part of the AMA's health system reform plan calls for requiring people earning more than 500% of the federal poverty level -- $52,000 for individuals -- to obtain at least catastrophic coverage. Those who don't comply would face tax penalties. People earning less would be subject to the requirement only after receiving tax credits or vouchers for buying insurance. "It's difficult to force somebody who can't afford health insurance to purchase it," said Joseph M. Heyman, MD, AMA Board of Trustees chair-elect.

Massachusetts lawmakers and government officials addressed the affordability problem with a host of reforms. The state created Commonwealth Care, a program in which private health plans provide state-subsidized coverage to residents who earn less than 300% of the federal poverty level and don't have access to work-based insurance. People who earn less than 150% of poverty pay no premiums. People who earn more than 300% of poverty have access to the plans, but not to subsidies.

However, insurance costs are still an issue, some experts said. The Connector board in March voted to increase premiums for subsidized plans by 10% starting July 1. Participating insurance companies initially proposed 14% premium hikes.