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Refreshing Thinking on the ACA

At the risk of sounding like a heretic and being forced to revoke my lifetime membership in the Health Policy Wonk Association, I confess that I’m tired of reading about Obamacare.

Don’t get me wrong. I still support the law and believe it’s the right approach, while acknowledging that the political compromises built into it and its somewhat ham-handed implementation have curtailed its effectiveness. But I believe those glitches will be worked out in time. That’s the way both laws and markets work – they find their equilibrium over time.

Unfortunately, the road to equilibrium is nasty, brutish, loud and paved with often-ill-informed news and opinion pieces – especially during an election year. I’ve always been a news junkie, but to quote the inimitable Lili von Shtupp in “Blazing Saddles,” I’m tired.

But I became reinvigorated upon reading the latest thought-provoking idea from Uwe Reinhardt and Paul Starr about the individual mandate. I confess to being something of a wonk groupie for these health economists - my copy of Starr’s Social Transformation of American Medicine, purchased in 1990, is replete with multi-colored underlines and marginalia from the umpteen times I’ve consulted it over the years, and I’m a sucker for thinkers like Reinhardt who are both brilliant and funny.

This recent blog by Reinhardt in The New York Times provides an interesting solution to the problem of the individual mandate. The mandate is essential to community rating, which makes insurance affordable for people with pre-existing conditions. But it has to be robustly enforceable to work. And the penalties in the ACA, the product of political negotiation, are less than fear-inducing.

Both Reinhardt and Starr agree that to make the system function properly and to make it more digestible to the average American, individuals should have the freedom to remain uninsured, but that after age 25 there should be “serious ramifications.” They instead offer a solution that gently pushes Americans toward getting insurance. Here’s how Reinhardt explains it:

“A superior approach [to the current ACA mandate] would be a form of nudging, originally proposed in 2009 by my Princeton colleague Paul Starr. Individuals would be free to remain uninsured after March 31, but for another X years they would be barred from potentially federally subsidized coverage at community-rated premiums available under the Affordable Care Act.

Starr suggested that X be 5. In my view that is much too lenient.

In a column in this paper’s Economix blog, I proposed that by age 25 an individual had to choose whether she or he would join a health insurance system based on social solidarity, with community-rated premiums, or instead join a system for rugged individualists, with medically underwritten premiums based on health status.

Only under the most dire economic circumstances would rugged individualists in this scheme ever be allowed into, say, Medicaid, to avoid human suffering that could be mitigated by critically needed health care. But thereafter the individual would not be allowed to accumulate any assets or enjoy income above the poverty level until he or she had paid back all premiums from age 25 on.”

I wonder about the potential unintended consequences of Reinhardt’s harsher approach – Starr’s tack may be a more reasonable way to launch this type of strategy. But how refreshing to read a proposed solution based on rational analysis, rather than emotion and politics.

What’s your take? I’d love to hear your reactions to Reinhardt and Starr’s ideas.

About the Author: Edie Sonn is CIVHC's Interim CEO and Vice President of Strategic Initiatives. Contact her at esonn@civhc.org.

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