In today’s New York Times, Paul Starr proposes a compromise that “goes to the heart of conservative and libertarian objections.” “[L]et individuals opt out of the new insurance system, without a penalty, by signing a form on their tax return acknowledging that they would then be ineligible for federal health insurance subsidies for a fixed period — say, five years.” During that period, if the opt-outer changes his mind, “they would face a market much like the one that exists now” and would have no guarantee of coverage.
Starr argues that giving Americans the choice of opting out of the mandate would address conservative anxiety about too much government meddling in the health care system while still getting more people into larger risk pools:
If this provision were added to the legislation, people without coverage through a group or Medicaid would have three basic choices in 2014, when the law goes into effect. They could use the new insurance exchanges to buy guaranteed coverage, receiving subsidies if their incomes were within four times the poverty level. They could take the five-year opt-out. Or they could refuse to do either and pay the annual penalties under the bill. (The legislation exempts them from penalties if the lowest-cost plan in the exchange exceeds 8 percent of their income or their income falls below the threshold for filing taxes.)
If softening the mandate could capture some Republican votes or win concessions for progressive priorities like the public option, it may worth considering. But since opponents of reform are likely to characterize any health care plan as a government-take over, giving individuals the option to opt out of insurance makes little sense.
The opt-out choice will attract younger and poorer Americans — the very same people who don’t typically buy insurance (either because they think they don’t need it or they can’t afford it) and leave insurance pools with a disproportionate number of sicker people who buy coverage because they need it. Insurance premiums will increase as a result and the government would have to spend more money on affordability credits.
Then, there is the five year period. Americans that choose to opt out of the mandate will forgo preventive care or annual check ups for up to five years, meaning they will enter the health care system sicker and more expensive — just like uninsured seniors who enter Medicare and end up spending 50 percent more than previously insured Medicare beneficiaries who also had chronic disease. Some of the uninsured will also wind up in hospital emergency rooms, where insured Americans will pick up the tab for their uncompensated care, but most significantly, Americans who become seriously ill will not be able to receive government assistance with their health care bill.
Starr is rightly concerned — despite Massachusetts rather positive experience with relatively low fine — that the Senate bill’s low penalties “compared to the cost of insurance” could encourage some Americans to remain uninsured. But allowing more people to go without coverage would exacerbate that trend, not avoid it.
Also, it’s worth noting that the Senate bill already allows states to opt out of the individual mandate if they can “demonstrate that they can meet the criteria — particularly on cost containment, improving the delivery system” of the federal standard. That of course, is a relatively high bar and quite different from what Starr is proposing.