The Individual Mandate in Health Reform: We’re Already Paying the Uninsured Tax

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All of the major health reform proposals under consideration by Congress include a provision that would require non-elderly citizens to carry health insurance, a so-called “individual mandate.” Though hotly-disputed by politicians, health policy experts of all ideological stripes agree that it is a key component of reform.
 
In order to get health insurers to stop denying coverage (guarantee issue) and start charging people roughly equivalent premiums regardless of gender or health (community rating), insurers need a guarantee that everyone will purchase coverage. Without such a requirement, only those who are sick (or anticipate needing care) will purchase coverage, which drives up insurance costs. We need everyone in the insurance pool—sick and healthy, young and old alike—to effectively lower costs.
 
The individual mandate, however, must be part of a broader set of reforms that encourage shared responsibility. Individuals would have the responsibility to purchase coverage, employers to offer affordable insurance (or to contribute to their workers' coverage) and the government to ensure that everyone can afford coverage and insurers play by the rules. This means offering subsidies and other affordability provisions (pdf) (such as limiting out-of-pocket burdens) to low- and middle-income families, as well as providing the choice of a government-sponsored “public option.”
 
So is the individual mandate a new “tax,” as Ewan Watt writes in an earlier YPNation post this week? It is true that the provision would charge individuals who can afford to purchase insurance but choose to go uncovered (there would be hardship exemptions for those who cannot afford coverage). But those with insurance are already paying an extra charge for the uninsured right now.
 
Under the current system, health insurance premiums are roughly eight percent higher because of uncompensated care that the uninsured receive. This translates to about $1,100 per family premium and $410 per individual premium. Health reformers want to bring this “stealth” tax into the open and start charging the uninsured people who can afford coverage. It's time to end their free ride.
 
At the end of the day it shouldn’t matter what we call the individual mandate. We need everyone covered—not just because it’s the right thing to do, but because it will help reduce the hidden tax that we’re already paying.
 
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