In Obamacare replacement legislation offered by the Senate Republicans this week, like the House-passed legislation, the individual and employer mandates were eliminated.
However, one problem with the House bill was that it essentially repackaged the individual mandate, renaming it the “continuous coverage” penalty, which would have increased premiums for people if they went 63 consecutive days without coverage during the preceding 12 months, hiking premiums by 30 percent with the penalty lasting for a year.
Fortunately, in the original discussion draft of the Senate bill dropped last week, this provision was stripped out — improving on the House legislation by removing one of its more controversial mandates.
That is, until it wasn’t. The Senate GOP has now revised its legislation and it includes a new version of the continuous coverage penalty, this time by denying re-entry into insurance markets for six months if individual coverage lapses for 63 days.
The individual mandate just won’t die.
To call this disappointing would be an understatement. The Senate has reintroduced this penalty — at the behest of insurance companies, not the American people — to replace the individual mandate.
All this to address a hypothetical problem, where some undetermined number of individuals game insurance markets, and only purchase insurance when they get sick.
Never mind that the vast majority of those with private insurance have employer-based coverage: 156 million, who had such coverage in 2015 because their employer or parent or spouse’s employer provided it, according to data compiled by the Kaiser Family Foundation. That is largely unchanged from 2007, when 158 million were covered by employer-provided insurance.
The individual insurance market, on the other hand, has grown from 14.5 million in 2007 to 21.8 million today, per Kaiser. That represented a shift from about 4.8 percent to about 6.9 percent of the population.
But, employer provided insurance dropped by 2 million, falling from 53 percent of the population to 49 percent. That accounts for an additional 10 million people who would have had employer-based health insurance had the rate remained the same.
Instead, the recession struck and employment population ratios dropped among working age adults in the intervening decade.
The increase in the individual market was not because of the individual mandate and Obamacare taxpayer subsidies. It was because employers were hemorrhaging employees in the recession and then dumped some more employer-provided coverage in the Obamacare era.
Millions of people who could not find a job were then forced into individual markets by the individual mandate and many were subsidized by Obamacare taxpayer transfer payments. In that context, Obamacare was a bailout for insurance companies in the recession.
Therefore, we’re talking about a potential penalty being slapped on 178 million in the private insurance market, because insurance companies told Congress they need a few more million customers. Does that seem right?
Penalizing people for losing their jobs and employer-provided coverage was un-American when Obama did it, and it’s un-American today.
Despite years of claiming there were people gaming the system on the individual market by only buying insurance when they get sick, after the individual mandate went into effect there is still no data to support the claim.
If anything, the greatest barrier to young people entering insurance markets are a combination of poor job creation in the U.S. the past decade and the high costs of insurance thanks to all of the mandates, representing millions who were displaced by the recession and then wound up on the individual markets.
Like many of the nation’s economic problems, this would be solved if the economy started growing robustly. The solution is to create jobs, not to punish those who lose them and the employer-based health insurance they once received.