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Gruber Study Says Alternatives to Individual Mandate Won't Work

By Jane Norman, CQ HealthBeat Associate Editor

February 9, 2011 -- Supporters of the much-criticized individual mandate in the health care law fought back with a report saying that fewer of the uninsured would be covered and costs would not be reduced if the mandate were dropped.

Meanwhile, the Obama administration is underlining its backing for the requirement—which says individuals must have health insurance or pay a fine.

Jonathan Gruber, a Massachusetts Institute of Technology professor, said in a conference call with reporters that he looked at two alternatives, one that would have people automatically enrolled in health insurance unless they opted out, and a second in which people would be penalized if they signed up late. Gruber is a longtime advocate of the mandate who pushed for its inclusion in the health care law (PL 111-148, PL 111-152).

"The bottom line is there is not an alternative to the mandate that would give us close to comparable results," he said on the call organized by the liberal-leaning Center for American Progress.

Some moderate Senate Democrats are looking at alternatives that involving charging higher insurance premiums later to those who do not sign up for coverage right away, similar to the approach in the Medicare Part D prescription drug program. Bipartisan legislation also has been introduced in the Senate by Republican Scott P. Brown of Massachusetts and Democrat Ron Wyden of Oregon that would allow states to opt out and design their own health care systems as soon as 2014, with the requirement that the state entities would have to meet the same standards as laid out in the federal law.

Two Senate Republicans, John Barrasso of Wyoming and Lindsey Graham of South Carolina, are pushing to allow states to opt out entirely.

Gruber said the idea of automatic enrollment in health insurance is attractive because it has worked well for 401(k) plans. But he said there are more obstacles when it comes to health insurance, including basing the enrollment on employment, since not all of the uninsured are employed. He said he estimated that at most, 24 million uninsured people would be covered, as opposed to 32 million Americans under the health care law in its current form. Premiums would increase and the government's costs would not be reduced, he said.

As for penalizing those who don't sign up right away, Gruber said he could see ethical problems with one idea, that of barring people from enrolling at all for five years if they don't sign up. It would be difficult to tell a 30-year-old with cancer that he can't get insurance because he did not sign up at 27, Gruber said.

Many healthy young people would decline to sign up, he predicted. Government costs would fall by about a quarter, but only 12 million of the uninsured would gain coverage. White House Press Secretary Robert Gibbs made it clear that the Obama administration is standing behind the mandate. "The president had to make a conscious decision about how to ensure that the legislation would prevent the problem that we've seen with free-riders; in other words, people that never think they're going to get sick and don't get sick, but they get hit by a bus and show up at the emergency room, and then they charge us basically to pay for it," said Gibbs.

"The president supports it," Gibbs said. "We've gone to court to maintain it."

He said that Obama will work with those who want to see improvements in the law, but "we believe that individual responsibility is a foundation for this."

Talk about alternatives has increased following two federal district court rulings that found the law unconstitutional, one on Jan. 31 in a multistate suit in Florida and the second in a challenge by the commonwealth of Virginia. Two other court decisions on the merits of the law found it constitutional. The issue is expected to make its way to the Supreme Court.

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