Explaining Ron Wyden’s Philosophy On The Individual Health Insurance Mandate

Over at the Incidental Economist, Aaron Carroll wonders why Sen. Ron Wyden (D-OR) — a long proponent of the individual health insurance mandate — is suddenly turning against it, pushing the Oregon Health Authority to apply for a waiver from requirement. Carroll attributes this newfound position to the politics of the moment, but I suspect it also has more to do with his philosophy of “choices” — the belief that states should have the freedom to innovate and establish their own health care proposals so long as they can provide the same level of coverage to their residents.

This philosophy has left its footprints on the current health law. Wyden successfully inserted an amendment that would allow states exempt themselves from certain federal requirements by 2017 and he worked out a deal with Senate Majority Leader Harry Reid (D-NV), under which a small sliver of the population — individuals and families under 400% of the federal poverty line who receive employer-sponsored coverage and spend 8-9.8% of their income on premiums — could “convert their tax-free employer health subsidies into vouchers that they can use to choose a health insurance plan in the new health insurance exchanges.”

Wyden believes that the more choices people have, the more vibrant and competitive the market and the lower the health care premiums. Wyden’s communications director Jennifer Hoelzer told me that it’s not that Wyden rejects the mandate; he just thinks states should have the option of opting out of it if they think they can do a better job of expanding access and lowering health care costs. She says that Wyden’s state innovation amendment is actually an “antidote” to those who want to repeal the individual requirement. “If you can do just as good or better than the federal law, you can apply for a waiver from that. And if you can cover your residents without a mandate, then you can go ahead and do that,” she said. “Maybe states do stick with the mandates, maybe they don’t, but what it says that all of these federal requirements, if you can prove that you can do just as good of a job without that, the federal government wouldn’t punish you for not complying.” “The federal mandate says you can do it in X,Y,Z and this just gives us the leverage to go a different way,” she said.

So Wyden isn’t so much against the idea of the mandate as he is for the idea of choices and state innovation. But his critics claim that Wyden is overstating the breadth of his waiver. January Angeles, a health policy analyst at the Center on Policy and Budget Priorities, reminded me that Wyden’s waiver does not exempt states from reforming their health insurance markets — extending guaranteed issue and community rating — and argued that “whether or not he gets this waiver, Oregon still has to implement those market reforms.” “There is no way to implement those market reforms” without a mandate, she said. “There is just no way to make it work and have the popular elements of reform and make it work.”

Indeed, according to Sec. 1332 of the health law, Waiver For State Innovation, Wyden would only exempt states from the following requirements:

(A) Part I of subtitle D: ESTABLISHMENT OF QUALIFIED HEALTH PLAN

(B) Part II of subtitle D: ESTABLISHMENT OF QUALIFIED HEALTH PLAN

(C) Section 1402: Reduced cost-sharing for individuals enrolling in qualified health plan

(D) Sections 36B, 4980H, and 5000A of the Internal Revenue Codeestablishment of qualified health plans

States would still have to abide by the insurance market reforms in subtitles A, B, and C. Wyden’s office concedes that “if a state can’t come up with a solution that meets those reforms and all of the other cost and coverage requirements then it won’t qualify for a waiver.” Still, it insists that it’s possible to enact insurance reform without a federal coverage requirement, just like states have been able to cajole drivers to purchase auto insurance without federal assistance. “Senator Wyden wrote the state waiver provision to be purposefully unspecific so that states would be free to innovate new ideas that none of us may have thought of yet,” Hoelzer wrote in an email. “And if they can’t make it work as some are suggesting, then they won’t qualify for the waiver.”

It’s unclear if states will be able to achieve marketplace reform without a mandate and Wyden isn’t necessarily requiring them to abandon the requirement. He’s just encouraging them to adopt innovative policies that can go further in achieving the goals of health care reform.