Individual Mandate Universal Healthcare Proposal

• Abstract
• Purpose of health policy or idea
• Characteristics of this policy
• Political and economic background
• Purpose and process analysis
• Expected outcome
• References

Featured in half-yearly report: G-politik in Industrieländern 5

Abstract

In February 2005 a bipartisan initiative was introduced in the California legislature that would establish an individual mandate for health insurance. Under the plan, each state resident would be required to acquire and maintain insurance coverage through their employers, the state, or by purchasing it privately. The proposal represents a major departure from the traditional US system of employer and state responsibility. The plan seems unlikely to pass as proposed at this time.

Purpose of health policy or idea

The universal healthcare act proposed in February 2005 aims to ensure that all Californians have at least minimum health care coverage.  It does this by establishing an individual mandate to obtain health insurance for state residents; that is, each individual is made responsible for obtaining and maintaining health insurance for themselves and their dependents, through their employer, the state, or by purchasing an insurance policy as an individual.

This proposal represents a dramatic shift from the traditional US model where a system of employers and the government are responsible for providing health insurance. It is one of the first serious attempts in the United States to make health coverage an individual mandate. Additionally, and unusually in an era of polarized politics, it is a bipartisan initiative co-authored by assemblymen Joe Nation (a Democrat) and Keith Richman (a Republican).

The proposal has three components:

• Establish and individual mandate for health insurance: California residents and their dependents would be required to obtain and maintain health insurance with a maximum $5,000 deductible and first dollar coverage for all medically indicated preventative care. 
• Increase availability of affordable personal health insurance: In order to help residents who do not qualify for state insurance programs and do not get insurance through their employers, the act requires the state Department of Health Services to work with counties to establish "quasi-public" purchasing pools to make the mandatory insurance affordable to individuals and business. 
• Subsidize small employers who provide insurance: the act would require the state to establish a program to subsidize small employers (less than 50 employees) who provide health insurance to their workers who make less than 200% of the federal poverty level. 

Funding for the program would come from applying a gross premium tax on health care services plans (they are currently exempt from this tax).  Additionally, the state would limit the amount businesses could deduct from their taxes for employee health insurance costs.

The state would enforce the mandatory health insurance by requiring residents to submit proof of coverage with their state income taxes.  If a resident could not prove that they maintain health insurance (through their employer, a private policy, or a state insurance program like Medi-Cal or healthy families), they could be automatically enrolled in their county's insurance program, and the premium costs would be deducted from their tax returns. The bill does not address how the state would enforce the policy on those who do not file income taxes, such as illegal immigrants, some students, and those making less than the taxable minimum.

The act is part of a package of eight bills that aim to improve access, control costs and enhance quality of healthcare in the state. 

The group most affected by the bill will be the state's 6.4 million uninsured, who will have to obtain and maintain coverage through private, employer or state-sponsored insurance plans. Also affected will be health care services plans (e.g. HMOs) upon who the universal insurance act will impose a tax equivalent to the gross premium tax paid by insurance companies (health care service plans are currently exempt from this tax). Savings from a reduction in uncompensated emergency care would presumably benefit the hospitals and health centers of the state's health safety net, and could be passed along to consumers. Insurance companies would benefit from a new consumer base as the traditionally uninsured are forced to purchase insurance.  It is unclear how the bill would affect the state's large immigrant population.

Main points

Main objectives

To ensure that all Californians have at least minimum health care coverage by establishing an individual mandate for health insurance.

Groups affected

California's 6.4 million uninsured, Health care/insurance plans, hospitals and health centers of the state?s health safety net, consumers.

Political and economic background

This bill comes during a time of skyrocketing costs for health care in the state and around the country.  More and more people are uninsured - 6 million in California alone. Although California's uninsured population is a diverse one, the largest single group of uninsured residents in the state (42%) are not the aged and infirm, but rather those aged 18-34 who are generally healthy, but when they are hit with catastrophic health events (e.g. appendicitis, an unexpected emergency room visit), the state must often absorb the costs for this care. The public health safety net system is collapsing under the double burden of rising health care costs and increasing volumes of uncompensated care - between 1996 and 2004, 82 California hospitals closed. 

On the national level, the Conservative leadership is increasingly championing an "ownership society" of individual rather than government or corporate responsibility for health care. A prime example of this trend is the aggressive promotion of tax-exempt health savings accounts instead of promoting employer or state-sponsored health coverage.

In California, this legislative session has seen extensive debate on healthcare. Assembly Speaker Fabian Nunez (a Democrat) has made health care major priority this session. Everything from obesity prevention to prescription drug coverage to expanding public insurance programs for the poor are being discussed. In addressing the problem of the uninsured, the legislature is considering a single payer universal health insurance bill, sponsored by Senator Sheila Kuehl (a Democrat), supported by a variety of grassroots groups, a plan to expanding state sponsored health insurance coverage for children, led by 100% campaign and PICO California, and various others.

The California voters' narrow rejection of an employer mandate for health insurance [see survey from April 2004 entitled "Supplement: Employer Mandate for Health Insurance"] also overshadows the debate over the uninsured.  The employer mandate legislation, known as SB2, passed the legislature but was put before the voters on the November 2004 statewide ballot, and was defeated by less than 1% (50.9% voted to repeal the bill). The failure of the employer mandate legislation, along with the current Governor's staunch opposition to employer mandates (due to his pro-business stance) make it clear that relying primarily on employers to provide health insurance for the uninsured is unrealistic in the state's current political climate.

Purpose and process analysis

Current Process Stages

	Idee	Pilotprojekt	Strategiepapier	Gesetzgebung	Umsetzung	Evaluation	Veränderung/Richtungswechsel
Implemented in this survey?

Origins of health policy idea

The bill was developed and introduced by Assemblymen Joe Nation (D) and Keith Richman (R). Prior to this, the two men attended 5 conferences held across the state with health care providers, insurers, researchers, and other stakeholders in the state's public health to seek input. The bill drew heavily on an issue paper issued in January 2004, entitled "Universal Coverage, Universal Responsibility. A Roadmap to Make Coverage Affordable for All Americans" from the New America Foundation, a centrist Washington DC-based think-tank.

The proposal is somewhat similar to a bill introduced in the California State Assembly in the Spring of 2003 sponsored by the California Hospital Association, Blue Shield of California and Kaiser Permanente. That bill would have required all unemployed or uninsured residents to purchase insurance, and all employers to provide insurance to their workers. The bill also requested, although did not guarantee, subsidies for low-income state residents. This bill did not pass the legislature. 

No other state has ever adopted or even seriously considered an individual mandate for health insurance, although it has been discussed from time to time.

Initiators of idea/main actors

• Regierung

• Patienten, Verbraucher

• Privatwirtschaft, privater Sektor

Stakeholder positions

Supporters

Because the bill will not be heard in the assembly until late April, many groups have not yet begun to submit their letters of support, making an assessment of community support (as well as opposition) for the bill difficult. A number of political leaders, including the Governor, have expressed interest in the concept, but have not official endorsed the bill.

Opponents

Several Democrats in the legislature have expressed opposition to the plan.  State senator Sheila Kuehl (D)has introduced a competing bill, SB 291, which would establish a centralized universal health care system organized and run by the state. Assembly Majority Leader Dario Frommer (D) feels that there are insufficient guarantees for those who can't afford insurance.

The California Association of Health Plans, representing the state's major health plans, opposes the plan because it is financed by closing the loophole that currently makes many health plans exempt from the gross receipts tax.

Health Access (a Liberal health advocacy group) opposes the plan because it believes it is wrong to  criminalize the pursuit of care by those who are uninsured, thinks plan doesn't adequately deal with the high cost of health care, and argues that individuals will not be able to bargain effectively for affordable care.

Actors and positions

Regierung
Assemblymen Joe Nation (a Democrat) and Keith Richman (a Republican)	sehr unterstützend		stark dagegen
Assembly Majority Leader Dario Frommer (a Democrat)	sehr unterstützend		stark dagegen
Patienten, Verbraucher
Health Access (liberal health advocacy group)	sehr unterstützend		stark dagegen
Privatwirtschaft, privater Sektor
California Association of Health Plans	sehr unterstützend		stark dagegen

Influences in policy making and legislation

This is a bipartisan initiative sponsored by Assemblymen Joe Nation (D) and Keith Richman (R). They formally introduced their proposal, entitled "the Universal Healthcare Act" as Assembly Bill 1670 (AB1670) on February 22, 2005.   The bill will be heard in the assembly in mid to late April.

Legislative outcome

pending

Actors and influence

Regierung
Assemblymen Joe Nation (a Democrat) and Keith Richman (a Republican)	sehr groß		kein
Assembly Majority Leader Dario Frommer (a Democrat)	sehr groß		kein
Patienten, Verbraucher
Health Access (liberal health advocacy group)	sehr groß		kein
Privatwirtschaft, privater Sektor
California Association of Health Plans	sehr groß		kein

Positions and Influences at a glance

Adoption and implementation

The state Department of Health Services would assume the role of implementation coordinator. The department would have to work with counties to establish the quasi-public "purchasing pools". 

These purchasing pools would then have to negotiate with private insurers to secure affordable basic health insurance policies for individuals and businesses in the county.

The state's Franchise Tax Board would need to establish a system for verifying individual's coverage. They would have to coordinate with the state and with the county purchasing pools so that individuals without coverage could be automatically enrolled in insurance programs, and money deducted from their tax returns and forwarded to the state and/or the purchasing pools. The state would also begin collecting gross premium taxes on health services plans.

Expected outcome

Although the bill has generated a great deal of interest, it is unlikely to pass at this time. Concerns about the state's ability to provide assistance for those unable to pay for their state-mandated health insurance coverage through expanded enrollment in state insurance programs or targeted subsidies will likely cause the bill to stall in the legislature. 

However, the bill should generate some interesting dialogue about the problem of the uninsured in California: who is responsible for the uninsured, barriers to obtaining and maintaining insurance, and how to deal with "free riders" that undeniably drive up the cost of health care for everyone, and how to make insurance coverage affordable for individuals. 

References

Sources of Information

Rubiner, Laurie and Micheal Calabrese "Universal Coverage, Universal Responsibility.  A Roadmap to Make Coverage Affordabel for All Amercians" Working Paper #1, the New America Foundation.  January 2004.  Available online at www.newamerica.net

Nation, Joe and Keith Richman "A Bipartisan Solution to Comprehensive Healthcare Reform".  February 2005.  Available online at http://republican.assembly.ca.gov/pdf/RichmanHealthcare0205.pdf

California Healthline.  www.californiahealthline.org

Author/s and/or contributors to this survey

Sarah Weston, Institute for Global Health; Carol Medlin, PhD, Institute for Global Health

Empfohlene Zitierweise für diesen Online-Artikel:

Sarah Weston, Institute for Global Health; Carol Medlin, PhD, Institute for Global Health. "Individual Mandate Universal Healthcare Proposal". Health Policy Monitor, April 2005. Available at http://www.hpm.org/survey/us/d5/4