PDC Test - Individual Mandate: An Affordable & Fair Approach to Achieving Universal Medical Coverage

You can earn 0.25 PDC by passing the exam following this article, which has been approved for publication by NCRA's Council of the Academy of Professional Reporters.

The questions are based on the material in the article but some may require additional research. Send your answer sheet to NCRA's Continuing Education Office, 8224 Old Courthouse Road, Vienna, VA 22182, and enclose a check for $40 (member) or $50 (non-member) to cover the processing fee. 

The Individual Mandate: An Affordable and Fair Approach to Achieving Universal Medical Coverage

BY BARBARA JOHNSON

Some of the most prominent shortcomings of the U.S. health insurance market are rooted in the fact that the system is a voluntary one. Outside the state of Massachusetts, which recently instituted broad-based health care reform, no one under the age of 65 years is required to obtain health insurance coverage of any kind. Voluntary insurance markets have led to a system centered on segmenting health risk instead of one whose primary mission is ensuring affordable access to necessary and efficiently provided high-quality medical services. But the past need not be prologue. The orientation of our system and the distorted incentives that it creates can be changed.

A vital component of such a change would be bringing all U.S. residents into our health insurance system through an individual mandate. Health insurers engage in many practices that make it difficult for people with health problems to obtain and maintain their coverage. They do so for the express purpose of protecting themselves from the potentially enormous financial consequences of adverse selection. Adverse selection entails the disproportionate enrollment in insurance plans of people with higher-than-average health risk. There is a natural tendency for such selection to occur because people prefer to pay for coverage only when they think they will need health care services. Consequently, insurers create, and regulators permit, structured barriers against such behavior, including such policies as exclusion periods for coverage of preexisting conditions, benefit riders that permanently exclude particular types of care, higher premium rates or cost-sharing requirements for people with health problems, and outright denials of coverage.

If we required that every person obtain at least a minimum package of health insurance benefits — a so-called individual mandate — we would eliminate adverse selection, and these barriers would become unnecessary and, in fact, indefensible. Remove them, and being in bad health would no longer prevent people from obtaining adequate coverage. But allow some opportunity for people to remain uninsured, and the straightforward argument for removing the barriers quickly evaporates.

At that point, the only mechanism for creating equity in the health insurance system regardless of health status would be government subsidization of the cost of adequate, guaranteed coverage using a revenue source unrelated to the decision to buy coverage, e.g., income surtax, sales tax, or other general revenue base. Because any guaranteed source of coverage in a nonuniversal system would attract a high-average-cost population, the amount of new government revenue required for subsidizing the “excess” risk in this way would be very large.

Substantial government resources — approximately $43 billion in 2008 — are currently devoted to supporting a minimal level of health care services for the uninsured. The federal government provides disproportionate-share hospital funds to safety-net hospitals through Medicare and Medicaid, and state and local governments provide varying levels of funding for uncompensated care. This kind of care varies greatly from locale to locale. Enforcement of a mandate for health care is the final issue. Once adequate subsidies exist, enforcement is essentially a matter of fairness to people who are playing by the rules. Enforcement through the tax system seems to be the most efficient approach. People who do not enroll in a qualified plan should receive care when it is sought (as if they were enrolled) but should then have to pay back premiums for the calendar year plus a penalty. In the view of many experts in this field, an enforceable individual mandate, with adequate subsidies and benefits as well as a choice of plans, is the most politically feasible route to universal coverage in the United States today.

Barbara Johnson of Nutley, N.J., is a participating member in NCRA. The questions are based on the material in the article, but some may require additional research.

Quiz for The Individual Mandate to Health Care Coverage in the United States

1. Which state mandates health care reform?
A. New Jersey
B. Florida
C. California
D. Massachusetts  

2. At what age does the population of the U.S. obtain government-sponsored healthcare?
A. 62
B. 70
C. 65
D. 55    

3. What is the dollar amount which the government spent in the year 2008 for health care services for the uninsured?
A. $188 million
B. $43 billion
C. $43 million
D. There is no dollar amount which has been calculated    

4. As regards health plans, what is the definition of adverse selection?
A. People choosing the wrong company for their needs.
B. Companies overcharging for their services
C. Disproportionate enrollment in health plans of people with above average health risk
D. Employers refusing to pay too high insurance premiums            

5. Some of the greatest shortcomings of the United States health insurance market are created by the fact that the system is a voluntary one.
A. True
B. False    

6. Why do health insurers engage in practices that make it difficult for people with health problems to obtain insurance initially?
A. To protect themselves from the enormous financial consequences of adverse selection
B. Because they only care about the expensive plans they sell
C. It costs more money to investigate people with health problems
D. Their doctors refuse to treat people with previous health problems.               

7. Government funding for minimal care in certain locales varies greatly.
A. True
B. False   

8. In order to operate a government-subsidized healthcare plan it is necessary to have
A. Adequate enforcement
B. Proper use of medications by patients
C. Doctors who can walk on crutches
D. Ice cream sodas every day  

9. Have voluntary health markets led to a system of segmenting health risks instead of providing high-quality medical service?
A. Yes
B. No
C. Maybe    

10. What is a minimal mandate for health insurance?
A. Requiring every person to obtain the best health insurance.
B. Requiring every person to obtain at least minimal health insurance
C. Requiring the health insurance companies to pay for cosmetic surgery
D. All of the above    

11. What are possible sources of revenue for funding health insurance through government intervention?
A. Income surtax
B. Sales tax
C. Other general revenue base
D. All of the above    

12. The Government currently provides disproportionate-share hospital funds to safety-net hospitals.
A. True
B. False    

13. The dollars to provide the funds under question 12 herein come through
A. Medicare
B. Medicaid
C. Local Governments
D. All of the above    

14. Does the author of this article believe that the current system can be changed?
A. Yes
B. No
C. Maybe    

15. Insurors create, and regulators permit policies such as exclusion periods for coverage of preexisting conditions, benefit riders that permanently exclude certain conditions, higher premium rates.
A. True
B. False    

16. Is it true that there is sometimes outright denial of coverage by insurance companies permitted under the current laws?
A. No, of course not
B. Maybe
C. Yes