President Obama has never understood Obamacare, nor health insurance for that matter, and so he repeatedly makes ludicrous statements. But the latest misunderstanding is really hurting the country because it’s keeping the government shut down.
His response to Republican proposals for a one-year suspension of the individual mandate, which requires nearly every American to have health insurance or pay a fine (or is it a tax?) was to say, “I am exasperated with the idea that, unless I say that, ‘Twenty million people, you can’t have health insurance,’ these folks will not reopen the government.”
If he understood his own law, Obama would realize that suspending the mandate has nothing to do with uninsured Americans having access to health insurance.
Obamacare requires health insurers to accept anyone who applies for coverage, known as “guaranteed issue.” It also says insurers cannot charge a person more because of any medical conditions, known as “modified community rating.” But there is nothing new about these types of provisions.
In the early 1990s, in the aftermath of the Clintons’ failed effort to create a government-run health care system, eight states—New York, New Jersey, Massachusetts, Vermont, Maine, New Hampshire, Washington and Kentucky—passed guaranteed issue and community rating laws in their individual (i.e., non-group) health insurance markets. Those laws were pushed and passed mostly by Democrats, and not one of them required people to have health insurance—not one.
That’s because most Democrats have thought for decades that health insurers should accept anyone who applies, regardless of a preexisting medical condition. And one of the lead proponents of that view? Barack Obama.
During his first presidential campaign Obama opposed a mandate to have coverage. It was Hillary Clinton who supported one. Obama said that if elected he wanted to try his way first and if it didn’t work he would support a mandate.
Well, Republicans are giving him that chance—if only he’d take it.
If there were no mandate, those 20 million Americans the president referred to could still buy health insurance because the two key ingredients for them to do so would still be in place: the taxpayer subsidies to help them pay for the coverage and the guaranteed issue provision requiring insurers to accept them if they have a medical condition.
And of those two provisions, the most important by far is the subsidies.
To be sure, without a mandate people could try to game the system by remaining uninsured until they are sick and then getting coverage. And that happened in those eight states, which is why most of them eventually modified their laws (and Kentucky repealed it). But that problem is mitigated because Obamacare only allows people to sign up during “open season,” a seven-week period at the end of the year.
In addition, the penalties are so low, especially in the early years, that they will have little impact anyway. Indeed, a recent Gallup survey revealed that 25 percent of those currently uninsured planned to remain that way, and that number is almost certainly on the low end.
If the mandate were suspended for a year, millions of Americans could, and would, still go online and sign up for coverage because they want it. The only difference is they wouldn’t be required to.
Republicans have given the president the opportunity to live up to his campaign promise by removing the mandate, but keeping the coverage. And if Obama only understood his own law, he’d accept the offer, the government shutdown would come to an end and both sides could declare victory.
Merrill Matthews is a resident scholar at the Institute for Policy Innovation in Dallas, Texas and a regular columnist for Rare and Forbes. Follow at @MerrillMatthews.