"From Atheist to Agnostic: My Personal Journey with the Individual Mandate"

When the Obama administration and the Congress take up health reform in 2009, one of the most contentious issues is likely to be whether to include an individual mandate (IM) in any proposal to expand coverage. When Chapter 58 passed, I was not a fan of the IM. But I’ve since had something of a conversion. While I don’t yet fully embrace the IM, I do think it’s played a much more important role than I expected in the coverage expansions in Massachusetts. And the experience here with designing and implementing the IM holds important policy and political lessons that should inform the debate on whether or not to include an IM in national reform.

Back in 2006, I knew the policy arguments for the inclusion of the IM in our reform law. In particular, the Urban Institute had shown in its Roadmap to Coverage project for the Blue Cross Blue Shield of Massachusetts Foundation that a voluntary insurance system would not get us close to universal coverage, even with a much stronger employer pay or play requirement than was ultimately included in Chapter 58. Without an IM, many people would not take up employer coverage that was available to them and others would not purchase individual coverage even if it were affordable, particularly younger people.

In addition, the IM would play a role in helping to make coverage more broadly affordable, since in a voluntary health insurance system people with lower than average medical expenses (e.g., young people) are less likely to purchase coverage. It was also important to cover as many of the uninsured as possible to reduce spending on uncompensated care, since reallocation of money from the Uncompensated Care Pool was a major source of financing for the new Commonwealth Care program.

I also understood the political role of the IM as an important leg of the “shared responsibility” stool. The federal government would like it, as an innovative “market oriented” approach to expanding coverage, which would help gain approval of the federal waiver and the continuation of federal financing required for coverage expansions. So I realized that the IM seemed to be a necessary compromise to get the MassHealth restorations and expansions and the Commonwealth Care program.

Still, I couldn’t shake my long-standing belief that the IM was, at its core, a policy created and pushed by conservative think tanks. The rhetoric about creating a “culture of insurance” in Massachusetts made me very uneasy. I thought the most important policy and political task ahead was to make sure that it was implemented in a “first do no harm” manner in order to blunt its potential negative effects.

Well, two-and-a-half years later, it’s hard not to argue that the IM has turned out to be a very important component of the coverage expansions in Massachusetts. In particular, it is likely the most important reason why more than a third of the newly insured—159,000 of 439,000 newly insured people--are in employer-sponsored plans. Instead of the feared “crowd-out”—the replacement of private coverage with public coverage—we seem to have had crowd-in (to use the words of MIT economist and Connector board member Jon Gruber). And the IM probably explains why a larger percent of Massachusetts employers are offering health insurance now than in 2006—79% according to the latest survey. These increases in Massachusetts are occurring at the same time that employer coverage is eroding nationally. And the IM has no doubt helped contribute to the rapid growth of Commonwealth Care, particularly among income groups that are required to pay a premium for CommCare coverage. It’s difficult to explain why coverage trends in Massachusetts—particularly in employer-sponsored coverage-- are so different from those in the rest of the country without giving due credit to the IM.

Many national health policy experts—including those who advised President-elect Obama-- have dismissed the importance of the IM. But I for one have been forced to concede that the IM does matter. It has been a more important part of expanding coverage in Massachusetts than I—and I think many others--expected. So, what lessons can the country learn about the IM from our experience here? I can think of many, but here are four big ones:

First, any IM must be coupled with major initiatives to make insurance more available and affordable, particularly for people with low and moderate income people. The expansions of MassHealth and the creation of Commonwealth Care have been essential to coverage gains here (more than half of the newly insured have obtained coverage through these public programs). We can’t obligate people to buy health insurance unless we make coverage more broadly available and affordable, and we will never reduce the number of people without insurance in any significant way without a major expansion of public programs (and federal funding to help pay for them).

Second, the country will need to make major reforms to the regulation of the private health insurance market—particularly the individual and small group segments-- if the IM is to achieve its goal of making coverage more broadly affordable by pulling more young people into insurance pools. Massachusetts has long had among the most stringent regulation of these markets, with guaranteed issue and renewability, modified community rating, and requirements that ensure larger more stable rating pools. Thousands of young people have bought coverage through the Connector and directly from insurers and our regulatory structure for the individual and small group market ensures that everyone in these markets benefits when lower risk people participate in the system. This is not the case in most other states, which still permit rating and underwriting practices that were abolished in Massachusetts nearly 20 years ago. To most people, insurance regulation is boring and arcane (hard to believe, eh?) but it’s a critical issue in national reform.

We will be able to inform the national conversation in this area even better when we find out more about the nearly 100,000 people who reported on their 2007 tax filings that they had access to affordable coverage but paid a tax penalty instead of buying it. I suspect a disproportionate number of these people were younger. The larger penalties this year might change the purchasing behavior of these folks, but since the penalties will still be much less expensive than buying coverage, it might not. If it doesn’t that will be another important insight about how difficult it is to get younger people to buy health insurance, even with an IM.

This brings me to my third lesson: Congress will need to design and implement any IM with great care and caution in order to sustain public support. This includes developing a transparent and publicly accountable process for setting benefit and affordability standards, reasonable penalties, and generous waiver policies, as the Legislature designed and the state has implemented here. I got an earful last week from some very well known national health policy figures who opined that the IM penalties here are too low and that the IM itself isn’t being enforced aggressively enough. They were particularly concerned about the lack of any penalties for people who don’t file state income taxes, and they had lots of ideas about how to reach this group (including not renewing driver’s licenses without a valid health insurance card and not allowing people to enroll their kids in school if the adults can’t prove they are insured). If these types of highly punitive enforcement measures were ever to become part of an IM, we would rightly have a swift and successful public movement to repeal the mandate

Finally, the expansions of employer coverage we’ve seen in Massachusetts are unlikely to happen on the national level unless a national coverage plan includes much greater obligations on employers to provide, or finance, coverage. A much greater proportion of employers in Massachusetts offer health coverage to their workers than in the rest of the country, and this base of employer coverage has interacted with the IM to expand the number of people with employer-sponsored insurance. If we want to see similar gains from an IM on the national level, we need to find ways to expand employer coverage. A fair share assessment of $295 per worker per year certainly won’t be enough—we’ll need a much more significant employer pay or play provision or, better yet, a national requirement that employers provide health insurance.

So, I’m still on a journey with the individual mandate. I’m not a true believer but I do think a national IM might be a purgatory on the way to something better (which for me would be a uniform national health insurance system, financed by a broad-based progressive tax). Purgatory isn’t heaven, but at least it’s temporary and it beats the alternative.

Nancy Turnbull
Harvard School of Public Health