The requirement that people have health insurance frees them from the worries that come with being one illness away from financial ruin.
On this episode, Shanoor Seervai talks to Don Moulds about what freedom means when it comes to health care. They look at the individual mandate, the controversial provision of Obamacare that requires people to have health insurance. Don argues that getting rid of the mandate restricts freedom in America, because having health insurance frees us from the fear that if we fall ill, we may not have access to care.
DON MOULDS: When you compel people to pay taxes that go for roads and public safety, you are creating much more of an opportunity for freedom. Nobody LIKES paying taxes for roads, but they recognize that they need those roads in order to have the freedom to do all the other things they want to, like driving to the supermarket to buy groceries, or taking their children to see a national park, or whatever.
SHANOOR SEERVAI: So how is the individual mandate, the requirement that you have health insurance, like roads?
DON MOULDS: Well, let’s say it’s part of an infrastructure that enables important freedoms. By requiring that people have insurance, insurance markets can exist without underwriting — that means selling or pricing insurance based on health. Before Obamacare, people often found themselves, if they had any kind of health issue, or a family member with one, they couldn’t quit a job or start a business on their own because they wouldn’t be able to get health insurance.
SHANOOR SEERVAI: You just heard from Don Moulds, executive vice president for programs at the Commonwealth Fund, comparing the requirement to have health insurance to taxes for roads. I’m Shanoor Seervai, and on this episode of The Dose, we’re going to be talking about what freedom means when it comes to health care. But we can’t do that without getting into the politics — if you’ve been trying to keep track of all the news coming out of Washington, then you know health care has been a huge source of debate for several months.
Policymakers have long disagreed about whether Obamacare is the right way for Americans to get health care. So today we’re going to look at one of the most controversial provisions of the law: the individual mandate.
Don, let’s get started with some of the basics about the mandate.
What is the Individual Mandate?
DON MOULDS: As I think most people know, the individual mandate was part of Obamacare, and is based on the principle of shared responsibility. Obamacare basically said this: We will help ensure that there are affordable health insurance options for Americans regardless of how healthy or sick they are, but in exchange, Americans need to buy coverage.
SHANOOR SEERVAI: How do you get coverage?
DON MOULDS: There are lots of different ways of meeting the requirement. If you are eligible for Medicare, Medicaid, or Veterans’ Coverage, or if you get coverage through your employer, then you’ve met it. You can also buy health insurance, either on the private market or through the health insurance marketplaces. And then there are lots of exceptions: for example, if the options where you live are prohibitively expensive, then you are exempt.
SHANOOR SEERVAI: But things really changed last December, because in the new Republican tax law, the individual mandate went away. That means as of 2019, people will no longer have to pay a fine if they don’t have insurance, correct?
DON MOULDS: Yes, that’s almost right. The mandate itself wasn’t repealed, but the penalty for not complying with it was. So, the enforcement mechanism is gone.
SHANOOR SEERVAI: Why did Republicans do that?
DON MOULDS: Why did they only repeal the penalty but not the whole thing, or why did they gut the provision?
SHANOOR SEERVAI: Well, both?
DON MOULDS: Republicans removed just the penalty because it was part of the tax legislation, and so the rules in Congress allowed them to make changes to tax law but not other provisions. The larger question about why they targeted the individual mandate is much more interesting and complicated.
SHANOOR SEERVAI: Can you say more?
DON MOULDS: I can try. The individual mandate was actually first implemented under a Republican governor, Mitt Romney in Massachusetts, and a lot of people attribute the idea to the Heritage Foundation, though in recent years they’ve distanced themselves from it.
SHANOOR SEERVAI: The Heritage Foundation being a conservative think tank.
DON MOULDS: Yes. So anyway, in California, where I was working in 2003, we briefly passed a law requiring employers to provide health insurance coverage. Republicans there were against it, and argued strongly for the individual mandate — they thought health insurance should be an individual’s responsibility, not an employer’s. They made a comparison to the requirement that people carry car insurance, and they argued that forcing employers to pay for health insurance in industries where they didn’t already was going to be a job killer.
SHANOOR SEERVAI: And what did Democrats think?
DON MOULDS: By and large, Democrats hated the idea of forcing workers to buy something their employer ought to provide. But the positions on the two sides of the debate have evolved, and now it’s the Democrats defending the individual mandate.
SHANOOR SEERVAI: Wow, that’s fascinating. I’m curious about how something that Democrats were opposed to, and Republicans favored, flipped and became such an important part of Obamacare?
DON MOULDS: Well, part of the reason is that Democrats saw Massachusetts succeed in passing health reform, and the individual mandate was an important part of that solution. Democrats also came around to the individual mandate once it was coupled with better options.
SHANOOR SEERVAI: How, exactly?
DON MOULDS: It just doesn’t work to tell someone they have to buy health insurance if no insurance company will sell it to them because of their health status, or if it is prohibitively expensive. So, once the individual mandate was coupled with subsidies for the poor, guaranteed issue, and other “help,” Democrats warmed to the idea.
SHANOOR SEERVAI: What’s guaranteed issue?
DON MOULDS: That’s one of the pillars of Obamacare: that an insurance company will sell anyone health insurance even if you are a bad bet because of your medical history — so you can’t deny someone coverage if they have, for example, diabetes, which we know is expensive to treat.
SHANOOR SEERVAI: Okay, back to the politics. Besides the Massachusetts success, how did the mandate catch on with Democrats?
DON MOULDS: It also helps to remember how wildly popular Obama was with his own party. Once he embraced the approach, lots of Democrats just sort of came around to it. On the Republican side, I think part of the reason the individual mandate took such a dive was that it probably looked very different from the version they envisioned — it came with all sorts of things they were opposed to: subsidies, rules about the products insurance companies could and couldn’t sell, and other things. For Democrats, those were all part of the deal, but for Republicans it looked like bigger government.
SHANOOR SEERVAI: So the government used the tax bill to get rid of what they saw as bigger government. What do American people think about the mandate?
DON MOULDS: The individual mandate was pretty unpopular with the public — it is still one of the least popular provisions of the Affordable Care Act. Health insurance isn’t cheap, and Americans don’t like being told what to do. So, Republicans weren’t getting this from nowhere; they were also echoing a view that a lot of Americans probably had.
How does repealing the individual mandate restrict freedom?
SHANOOR SEERVAI: Right. And one argument I’ve heard people make against the mandate is that by nature, it forces people to do something, and so it’s a limit on freedom. But you make the argument that in fact repealing the individual mandate restricts freedom. Tell me how?
DON MOULDS: So the mandate sets into motion a whole set of important freedoms that wouldn’t be possible without it. In short, it gives people freedom from the fear that if they get sick, they could be in a position where they would be without access to health care.
SHANOOR SEERVAI: But isn’t it inherent in the nature of a “mandate” that it restricts freedom?
DON MOULDS: Of course, requiring people to buy health insurance is a restriction on their freedom. But just about every law restricts freedom in some way: a stoplight tells me I am not free to blow through an intersection; the taxes I pay are a restriction of my freedom to spend my money however I want to. So the question isn’t, “does a law restrict freedom?” but “does that restriction justify the benefits it creates?”
SHANOOR SEERVAI: And you think the benefits from the mandate justify the “restriction” element of it?
DON MOULDS: Yeah, the benefit of the individual insurance mandate comes from the collective goods we all receive from more people participating in insurance markets: we’re talking about lower rates of uncompensated care, insurance markets that are a mix between sick and healthy people, and ultimately lower premiums and better access to health care. It helps make the Obamacare marketplaces sustainable, giving millions of people a source of comprehensive health insurance, and millions more the peace of mind knowing that they have a place to go if they ever need to buy it.
SHANOOR SEERVAI: So this peace of mind is where the freedom comes from?
DON MOULDS: Yes. Having universally available, high-quality health insurance frees us from the fear of being one illness away from financial ruin, from being tethered to a job (or a relationship for that matter) because it is the only way of getting health insurance. It also frees us and our loved ones from the physically or financially disabling effects of an unmanaged illness.
SHANOOR SEERVAI: Well, these are freedoms I think Americans cherish for sure: the freedom to pursue the livelihood they want, and from financial stress. But going back to the roads example you started with, why does it seem like people are more willing to pay taxes for roads than buy insurance.
DON MOULDS: What’s interesting is that while people accept that roads make them more free, and are willing to pay taxes to have roads, this sort of intuition hasn’t kicked in with the mandate. A lot of people think that it’s a serious infringement. And when it gets talked about publicly, the other side of it, which is the freedoms that it enables, are rarely part of the discussion.
SHANOOR SEERVAI: This is making me think of a centuries-old philosophical idea that Isaiah Berlin wrote about in the mid-20th century: the distinction between negative liberty and positive liberty. Americans seem to place a premium on negative liberty, which is the freedom “from” any sort of requirement. They seem to have less appreciation for positive liberty, which is the freedom “to” belong to a collective that gives you other freedoms. Would you agree?
DON MOULDS: Yeah, Americans tend to be opposed to just about any limit on freedom, even though the mandate enables freedoms some American’s wouldn’t otherwise have. For example, if your kid has a chronic condition and you wouldn’t be able to buy a policy on the open market because nobody would sell you one, are you really free?
SHANOOR SEERVAI: Being free from worrying about your child’s illness sounds like a pretty important freedom to me. Why do you think Americans are so averse to the mandate?
DON MOULDS: I’m not sure I know, but I have some theories. One is that the relationship between the mandate and the benefits that come from the health insurance coverage in Obamacare is pretty complicated, and a lot of people don’t really understand it. All of the experts agree that when the mandate penalty goes away in 2019 the cost of insurance is going to go up, but people don’t know by how much. So the extent of the harms isn’t yet understood.
SHANOOR SEERVAI: Right, makes sense.
DON MOULDS: Another reason is that the mandate is new, and Americans tend to have a negative reaction to new restrictions on their freedom, until they’ve lived with the consequences and are convinced that it is a good trade.
SHANOOR SEERVAI: Okay, so a big part of this is not enough information about how the mandate impacts the cost of insurance, and essentially human nature — people don’t like change.
DON MOULDS: Yes. And then the other part of the story is that the mandate affects different people in different ways. If you were sick and couldn’t buy insurance, the benefits of being able to get a policy are clear. If you are young and healthy, there are also benefits, but they may not feel as compelling. The thing people sometimes forget, though, is that eventually almost all of us are going to need health care.
SHANOOR SEERVAI: Yes, when we’re healthy, we tend to forget about the stresses and costs of getting sick. Are there other reasons people oppose the mandate?
DON MOULDS: I think the last reason is that Obamacare still needs work in some key areas, so it hasn’t fully delivered on the benefits. Specifically, it still isn’t as affordable as it needs to be for some groups of people: if you’re middle class and not eligible for subsidies, it can still be quite expensive. That is something that is fixable, though, and we should be leaning in instead of running away.
The future of the individual insurance market
SHANOOR SEERVAI: Mm hmm, that makes sense. Looking ahead, what do you think is going to be the future of the individual insurance market now that the mandate has been repealed?
DON MOULDS: The assumption has always been that without the mandate, the whole, you know, house of cards kind of falls apart. You have to have compulsory insurance to make insurance affordable. And we’re now in this environment where it’s about to be gone. And there’s very much an open question as to whether the marketplaces in particular are going to survive. We know it is going to make health insurance more expensive.
SHANOOR SEERVAI: 2019 is around the corner. How much more expensive?
DON MOULDS: Early data show that premiums are going up, but not by as much as some people expected. It may well be that we can still have affordable insurance. I think a lot of it depends on how well insurance marketplaces have done reaching the young, healthy people who are the key.
And there are still a lot of people who are eligible for subsidized health insurance. And for some of them, the price point is still pretty low, even as premiums are going up. So it’s still affordable for some people.
SHANOOR SEERVAI: And I’m actually going to be talking about how the health insurance market places did with the Fund’s Sara Collins on a future episode, so this is a good note to close on. It’s been great to have you on the show, Don!
DON MOULDS: This was fun, thanks for having me.
SHANOOR SEERVAI: Listeners, thanks for joining us. If you’re enjoying The Dose, if you have questions about health policy, or if you want us to change something up, we want to hear from you. Please write us a review, or send us an email. Our address is [email protected]. See you next time.