Sen. Ben Nelson (D-NE) — who will likely face a tough re-election bid in 2012 — isn’t ready to endorse a specific alternative to the politically unpopular individual mandate, despite asking the Government Accountability Office (GAO) to study alternatives to the provision. In a press release commenting on the release of that analysis, Nelson said the report “identifies options to consider” but cautioned that the mandate is “necessary to maintain the ban on pre‑existing conditions” and keep costs down:

“The GAO report makes it clear that if the individual mandate is struck down by the Supreme Court, insured Americans will again have to pay both their costs and also pay the costs for the uninsured, which totaled $57 billion in 2008,” said Senator Nelson. “Nebraska families and businesses can’t afford to pay to insure their families and pay the costs of the uninsured, too.

“Without the individual mandate or a successful alternative, the number of uninsured is certain to grow and Nebraskans, as well as all Americans, will pay a hidden tax for their health care of $57 billion each year,” said Nelson. “Washington can consider the GAO’s findings to ensure that everyone pay their fair share, to ban pre-existing conditions and to increase coverage.

“Washington needs to explore the GAO report’s alternatives and others to see if there is a successful way to improve health reform.”

The report itself offers nine alternatives to the mandate without estimating how many people would likely be covered under each option:

- Modify open enrollment periods and impose late enrollment penalties.

- Expand employers’ roles in auto-enrolling and facilitating employees’ health insurance enrollment.

- Conduct a public education and outreach campaign.

- Provide broad access to personalized assistance for health coverage enrollment.

- Impose a tax to pay for uncompensated care.

- Allow greater variation in premium rates based on enrollee age.

- Condition the receipt of certain government services upon proof of health insurance coverage.

- Use health insurance agents and brokers differently.

- Require or encourage credit rating agencies to use health insurance status as a factor in determining credit ratings.

The mandate is designed to encourage individuals who wouldn’t normally purchase insurance coverage to enroll and expand the size of the health care risk pool, thus spreading the costs and risks of insurance across a larger population (and helping bringing down health care costs) This kind of policy has almost eliminated uninsurance in Massachusetts where, 98 percent of residents now have health insurance and is expected to insure 32 million Americans by 2019 as part of the Affordable Care Act.

But limited real-world experience with the alternatives offered above (some of which, like the public campaign, can work in conjunction with the mandate) has made it difficult to estimate how many people would be covered under a different proposal. Last month, MIT’s Jonathan Gruber — who was interviewed for the GAO report — published a paper modeling the auto enrollment and the late enrollment penalties and found that both would fall short of the ACA’s goals. He found that auto enrollment would reach 24 million uninsured — since “only about one-third of the uninsured are actually offered employer-sponsored insurance in which they can be auto-enrolled” — while the late enrollment penalty option would fare even worse, enrolling just 21 million Americans. The GAO details the complexities of each option.

Vulnerable Democrats are understandably interested in seeking viable alternatives, but in doing so they should be mindful of the fact that alternative solutions could reverse the progress made in current law. In talking about these policies they also risk buying into the GOP’s premise that there is something inherently wrong or terribly coercive about asking able individuals to take personal responsibility for their health care expenses. Instead of playing defense, they should be reminding the public of the long history of Republican support for the idea.

As we previously reported, the Vermont legislature, led by Gov. Peter Shumlin (D), has been considering a proposal to establish some sort of single payer health care system, where a single public insurer provides health insurance to all state residents, similar to the Medicare system for American seniors.

Last night, the Vermont House of Representatives debated and approved by a 92-49 a bill that would create a single payer system in the state. Shumlin praised the move as making Vermont the first state where “health care will be a right and not a privilege“:

After hours of debate, the Vermont House of Representatives approved a bill that would create a single-payer health care system in Vermont. It passed 92-49. In a meeting right after the vote, the house speaker, the governor and others who worked on the bill called it a historic moment for Vermont.

“Become the first state in the country to make the first substantive step to deliver a health care system where health care will be a right and not a privilege,” said Gov. Peter Shumlin.

The “bill outlines a four-year timeline leading to establishment of the statewide, publicly funded system. It begins by setting up the Green Mountain Care Board on July 1 with a budget of $1.2 million to begin planning the new system. It then creates a health insurance marketplace — or ‘exchange,’ of the sort required by last year’s federal health care legislation. And it then calls for converting the exchange to the Green Mountain Care system.”

Now that it has passed the House of Representatives, it will move on to the Senate, where it is expected to pass. A bigger hurdle Vermont faces is obtaining a waiver from the federal health care reform act and finding a way around federal ERISA laws — which “pre-empt states from enacting legislation if it is ‘related to’ employee benefit plans — that insurers could use to sue the state. The health reform law currently offers a waiver to states who meet certain standards by 2017; Rep. Peter Welch (D-VT) has introduced an amendment that would move the waiver date up to 2014 — an idea that President Obama has endorsed.

This week, 200 doctors from 39 states including the District of Columbia signed an open letter saying they would seriously consider moving to the state to practice medicine if it enacted a single payer system. “The idea of having one set of rules, one form for billing, and knowing that all patients are covered – that would be wonderful,” said Scott Graham, a Kentucky family physician who signed the letter.

Republicans don’t spend too much time talking about alternatives to the Affordable Care Act, but if they do, they often argue that rather than having the government define a standard package of health care benefits that all insurers must provide, Americans should have the option of purchasing catastrophic coverage (high-deductible “consumer-driven” health care plans) and tax-advantaged health savings accounts. Such plans require consumers to pay $1,000 or more per person for health care before their coverage kicks in, but charge lower monthly premiums and allow policyholders to stow away dollars for medical emergencies.

Here is Sen. John Barrasso (R-WY) advancing the proposal to Obama during the White House health care summit, who in turn argues that catastrophic plans wouldn’t make sense for the vast majority of Americans:

BARRASSO: And, Mr. President, when you say, with catastrophic plans, they don’t go for care until later, I say sometimes the people with catastrophic plans are the people that are best consumers of health care, in using — the way they use their health care dollars. [..]

OBAMA: Would you be satisfied if every member of Congress just had catastrophic care? Do you think we’d be better health care purchasers?

I mean, do you think — is that a change that we should make?

BARRASSO: Yes, I think — I think, actually, we would. We’d really focus on it. You’d have more, as you’d say, skin in the game… [...]

OBAMA: Would you feel the same way if you were making $40,000 or you had — that was your income? [...] [M]embers of Congress are in the top income brackets of the country, and health savings accounts I think can be a useful tool, but every study has shown that the people who use them are folks who’ve got a lot of disposable income. And the people that we’re talking about don’t.

The other problem is that catastrophic-only plans generally appeal to a younger and healthier population and may even discourage those individuals from seeking preventive services, even, as it turns out, when that care is free. A new study of 36,000 families enrolled in high-deductible plans finds that health spending was 14 percent less in the first year than for families with lower deductibles, but — and this is a big one — these families were much less likely to invest in preventive care that could stave off more expensive chronic conditions. This may be because they have more “skin” in the game as Barrasso put it, or because they simply don’t understand the coverage benefits. Applicant were also “typically younger and healthier and lived in areas with higher percentages of college graduates”:

But the percentage of young children receiving vaccinations dropped as much as 8.5 percent in the first year their families were covered by the high-deductible plans, while vaccination rates for children in standard plans rose slightly. And use of cancer screenings was two to three percentage points lower among families with high deductibles.

It’s worth noting that the existing legislation already gives younger individuals the option of enrolling in high deductible plans that cover less services at cheaper rates. Insurers will also be able to price their policies based on age and charge young people rates that are three-times lower than what older (and presumably sicker) applicants will be paying.

But some conservatives have proposed going even further, suggesting that insurers should be allowed to design catastrophic plans outside of the requirements of the law (which mandates policies to provide a set of essential benefits) and the exchanges. You can see how this wouldn’t work. If younger people have an incentive to enroll in cheaper high-deductible coverage, the exchanges will be left with sicker individuals who need comprehensive coverage and use it frequently. Without healthy individuals to offset the costs of this care, premiums will have to increase, pushing out everyone but the sickest and neediest applicants. As a result, the exchanges will become cost prohibitive for most Americans.

Meanwhile, the younger people who are enrolled in the cheaper high deductible policies will find their coverage inadequate once they — as we all inevitably are — fall ill and may be even more likely to do so if they forgo preventive care.