The Blue Ribbon Commission for Health Care Reform has presented its recommendations to legislators, and now the debate begins. We welcome the robust dialogue. Inevitably, though, misperceptions arise, most notably about the requirement that all Coloradans have health coverage — an “individual mandate.” It’s important to understand why this strategy is vital to reducing health care costs and expanding coverage in Colorado, and why the commission believes it will work.
One of the things that makes health insurance so expensive is paying for people who don’t have insurance. Thus, one of the ways to get premium costs under control is to cover more people.
Some skeptics discount this strategy. They point to Massachusetts, which enacted a similar requirement last year but is still seeing rising insurance premiums.
That comparison is ill-advised, for many reasons. Massachusetts’ mandate only just took effect. Massachusetts’ residents were required to sign up for health insurance, or pay a modest penalty, by Dec. 31, 2007. It takes at least a year to see the impact of a larger risk pool on insurance rates. But even once more time has elapsed, Massachusetts may not reap the full benefits of its mandate because so many people don’t have to comply.
For example, any Massachusetts resident whose health insurance premium would exceed 7 percent of their income is exempt. In Colorado, we recognize that affordability is a grave concern for many people. But instead of exempting them, we would enable them to comply with the requirement. We would expand Medicaid and the Child Health Plan Plus to cover more people, and provide sliding-scale subsidies to allow the working poor to afford private coverage.
Even more troubling, Massachusetts exempts people who work for businesses with fewer than 11 employees. But that is precisely where the greatest number of working uninsured people are found. In Colorado, 13 percent of our state’s uninsured, or about 104,000 people, work for firms with fewer than 10 employees; another 60,000 are sole proprietors. If we don’t bring these people into the pool, we’ve missed one-fifth of uninsured Coloradans. We can’t afford to do that.
If an insurance mandate is to work, insurance must be accessible and affordable and the mandate enforceable. As noted above, the commission addresses the first two requirements by expanding eligibility for public programs (only the very poorest in Colorado qualify for Medicaid now) and providing subsidies to help the working poor afford private coverage. We would make changes to the individual insurance market to make coverage more affordable even for people with health conditions. And the requirement applies only to minimum coverage; people can buy richer plans if they wish, but they need only a basic plan to meet the mandate.
We would enforce the mandate by assessing a penalty equal to one year’s insurance premium to anyone who does not provide proof of insurance coverage when filing their income tax return. Massachusetts’ penalty? Just $219. In Colorado, we know that 25 percent of our uninsured are in households earning more than $50,000 annually.
Finally, it is important to recognize that the individual mandate is part of a comprehensive package of linked recommendations meant to be staged over time. In the commission’s vision, the mandate would not be implemented until other reforms are undertaken to improve efficiencies, expand coverage and make insurance affordable.
For comprehensive health reform to work, we need both patience and persistence. The commission has laid out a roadmap, starting with cost savings and program efficiencies and leading to greater access to care and coverage. Let’s start hitting those milestones.
William N. Lindsay III chaired the Blue Ribbon Commission for Health Care Reform. He is president of the Benefits Group of Lockton Companies, LLC.
