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Oregon considering insurance mandate
How would a law requiring individual health coverage impact the state?
By Betsy Q. Cliff / The Bulletin
Published: March 19. 2009 4:00AM PSTWhat if there was a law that required everyone in Oregon to have health insurance?
The state is considering a proposal that would do just that, and the federal government could be moving that way as well.
Known as an individual insurance mandate, the law would require everyone to carry health insurance. Those who get it from an employer, the government or another source would likely keep the same or similar coverage. The uninsured would need to purchase insurance; low-income people would likely be helped by subsidies.
The Oregon Health Fund Board included an individual mandate in its recommendations released last fall. At the federal level, the idea is being talked about by a number of groups, including members of Congress and a number of health care organizations.
In Oregon, “the (Health Fund) Board feels very strongly that getting everyone under the tent of health care coverage is critical,” said Carol Robinson, interim executive director of the Health Fund Board.
If the idea is implemented in Oregon, Robinson said, it almost certainly will not be passed before the 2011-13 legislative session. Before then, she said, the board will try to work on cost containment strategies that affect those already covered with state dollars, including Medicaid recipients, prisoners and state employees.
Requirements
The individual mandate would almost certainly be coupled with other health reforms. One would be the requirement that insurers sell a policy to someone regardless of health status. Today, an insurer can deny an individual coverage if he or she does not meet health requirements.
Another may be a requirement that all employers over a certain size provide insurance or pay into a pool to help subsidize the cost of individual coverage. Those reforms could come with incentives or subsidies to small businesses to help them afford health care coverage.
The mandate would also likely include subsidies for those below a certain income level. “An insurance mandate without subsidies doesn’t get you anything,” said Dr. Bart McMullan, president of Regence Blue Cross Blue Shield of Oregon. “You can’t require people to have what they can’t afford.”
As a way to expand insurance coverage, many people see the mandate as the only option. “Let’s say we provide subsidies but no mandate,” said McMullan. “What you have is a very unstable market. People will opt in when they need services and then they would go off.”
In essence, McMullan is talking about the concept of risk pooling, the essential feature of a mandate. By requiring everyone — both the healthy and the sick — to carry insurance, the healthy are helping subsidize coverage for the sick.
It works the same in many insurance pools. Auto insurance premiums go to pay out claims for those who get in accidents. People buy into the system because they never know when they’ll be the ones who need the coverage.
Many people feel the same principle should apply to health insurance, said Kathleen Stoll, deputy director of Families USA, a universal health care advocacy organization based in Washington, D.C. “There is a sense that people should not be penalized for their health status or pre-existing conditions,” she said. “Not only not denied coverage, but that they should not have to pay a lot more based on that condition.”
Containing costs
Though some argue that the cost of insurance could go down by spreading the risk, the experience of the only state that currently has an insurance mandate belies that idea, at least in the short term.
Massachusetts passed an individual mandate in 2006, and its state-funded insurance plan for low-income people has had higher-than-anticipated costs, according to a study by the Urban Institute, a policy research organization based in Washington, D.C.
Though costs were lower than projected in 2007, they exceeded the 2008 state budget request of $427 million by $153 million. In 2009, the Massachusetts Legislature requested $869 million to cover costs.
Though some of the costs are short term, the report found, “Massachusetts also faces a long-term cost problem,” it concluded.
While some of the costs may be unique to the state, including a significant lack of competition among health care providers, some are the result of creating coverage without cost containment.
“One of the things you have to keep in mind about Massachusetts is the political calculus,” said Linda Blumberg, who co-authored the Urban Institute’s report. They decided, she said, “we want to get coverage in place, then we will figure out cost containment.”
Oregon, Robinson said, is not using the same strategy. “We’re taking the opposite approach,” she said. “Let’s start to drive costs down ~ and then try to cover everyone.”
An insurance mandate would still likely take some tax dollars and, though the cost is not specified in the Health Fund Board’s report, it could be more than $1 billion each year, said Denise Honzel, who co-chaired the committee that researched mandates and made recommendations to the board.
Some of those costs, however, may take the place of others, including the cost of caring for the uninsured. Nationally, about $1,000 of every family insurance premium each year goes to cover the cost of the uninsured, said Stoll.
Whether the idea will become a reality is yet to be seen. “There’s no formal plan at this point,” said Robinson, and many of the specifics have yet to be ironed out.
Still, she said, many Oregonians recognize that something’s got to give. “People are understanding that our current system is really broken,” she said. “There seems to be a growing acknowledgement that there ought to be a better way.”
Betsy Q.
Cliff
can be reached at 541-383-0375 or bcliff@bendbulletin.com.
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