Making the Affordable Care Act Individual Mandate Work

The Supreme Court has ruled that most of the Affordable Care Act, aka Obamacare, is constitutional.

In order to provide affordable care to all, insurance companies need the healthy to pay premiums, and not just the people who will use a lot of health care resources. In order to try and ensure this, Congress gave a penalty for those who don’t purchase an insurance plan. The problem is that the penalty is far less than the cost of insurance, and the only way they can even force you to pay is if you are getting a tax refund, in which case they can deduct the fine. So someone could elect to go without insurance, and, whether or not they pay the fine, just sign up if they need it. If enough people did that, the plan would not be sustainable. The penalty is $695, and up to $2085/year or 2.5% of income for a family, though it’s lower the first two years. A healthy individual might decide $695/year for no insurance is a better deal than $2000/year for insurance they don’t think they need.

So I propose a solution. Congress could pass a law saying that if someone does not get and maintain insurance within 1 year of when it becomes mandatory, and if they elect to get it later, they will be responsible for the first $10,000 or so expenses they sustain within the next 3 months of applying for insurance. If they get in a major accident or discover a lump that turns out to be cancer, they will still be able to get care and not be burdened with medical expenses that could easily far exceed $10,000. But for those considering going without insurance, even that would be a tough bill to pay.

Of course even now people go without insurance because they feel they can’t afford it. Although that could still apply after the Affordable Care Act goes into effect, the calculations change. Just as a poker player will adjust their bet depending on the size of the pot, I believe consumers would do the same. Instead of a cost of $2000/year versus $0, it would be $2000 versus $695, for example. Thus the cost of going without insurance in this example would drop from $2000 down to $1305 after paying the penalty (or tax, depending on your point of view). Balancing the benefits of having insurance and the risks of not having it, I think more people would elect to get insured with this plan.

Author: Daniel Ginsberg, MD, FACP

I'm an internal medicine physician and have avidly applied computers to medicine since 1986, when I wrote my first medically oriented computer programs. So yes, that means I'm at least 35-years-old! View all posts by Daniel Ginsberg, MD, FACP