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Efforts May Intensify to Find Policy Patch for Health Care Law Minus the Mandate

By John Reichard, CQ HealthBeat Editor

August 12, 2011 -- The federal appeals court ruling Friday declaring the individual mandate in the health law unconstitutional may turn up the flame under efforts to find another way to prod uninsured Americans—especially young, healthy ones who are good insurance risks—to buy coverage.

Lawmakers already have done a fair amount of thinking about the matter, given how controversial it is require people to carry health insurance as the health care law does. It’s the least popular part of the law, according to polls.

Alternatives range from reducing open-enrollment periods to buy coverage, charging penalties for late enrollment in health plans offered by insurance exchanges, and allowing people to opt out from carrying coverage if they sign a waiver saying they will be financially responsible for all of their health care costs if they decide to go without insurance.

If the appeals ruling handed down Friday survives, the health care law, as a piece of policy work, will practically cry out for some kind of patch that puts pressure on people to buy coverage but doesn’t legally require them to do so.

That’s because the ruling keeps in place consumer protections in the law designed to make coverage affordable—such as the rule that insurance companies take all applicants regardless of their health status. Without more good risks coming into insurance plans to offset the costs insurers will incur from enrolling previously uninsured people with high-cost medical conditions, premiums may zoom for everyone.

The Government Accountability Office has examined alternatives to the mandate that might help bring those good risks in. And lawmakers such as Democratic Sens. Ben Nelson of Nebraska and Claire McCaskill of Missouri have talked about introducing bills with alternatives, as has Rep. Peter A. DeFazio , D-Ore.

GAO released a report in March saying that many analysts and experts see an approach similar to that taken in Medicare Part B or Part D as an alternative to the individual mandate. Part B, for example, the doctor care part of Medicare is voluntary, but almost everybody eligible signs up. That’s because the longer a senior waits to enroll, the higher the monthly premiums he or she must pay.

Similarly, the health law could be changed so that uninsured people would have to pay much higher premiums if they delayed the purchase of coverage. Open enrollment periods in health insurance exchanges could be limited to once every few years. There could be penalties for people who don’t enroll in plans offered by the exchanges in the form of having to pay higher copayments or deductibles for their benefits. Or, there could be some combination of all of those elements, GAO said.

The American Academy of Actuaries said earlier this year that the GAO report is a “significant” examination of possible routes for lawmakers to take, some of which should be considered even if the mandate is kept intact. “Any mechanism that encourages broader participation will help limit adverse selection,” Cori Uccello, senior health fellow for the American Academy of Actuaries, said at the time. “These tools should be considered with or without the coverage mandate.”

For his part, DeFazio has drafted a proposal under which those who do not want health insurance would be required to file an “affidavit of personal responsibility” waiving their right to enroll in a health insurance exchange or in Medicaid. They also would be barred from using bankruptcy court to reduce health-related debt.

Congress is unlikely to do anything to change the individual mandate provision of the law until its constitutionality is settled in the courts. But the talk about what lawmakers could do to replace it is sure to intensify until that happens.

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