Community Editorial: Individual Mandate Key to Health Care Law

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This week the Supreme Court commenced three days of oral arguments on the constitutionality of the individual mandate to purchase health care insurance. The mandate is the cornerstone of the financial model for the Affordable Care Act (ACA), passed exactly two years before on March 23.

The court’s consideration of the individual mandate is obviously worthy of the media attention it is receiving for its fundamental constitutional questions; clearly the court’s decision will chart a directional course for our country. And as has been widely reported, the court’s ultimate decision will affect the ACA’s ability to deliver on promises for health care reform and the very viability of the ACA.

The ACA came to include the individual madate in order to achieve a vision articulated by Don Berwick, the former administrator of the Centers for Medicare & Medicaid Services (CMS). This vision, dubbed the “Triple Aim,” consists of three overarching goals: better care for individuals, better health for populations and reduction of per capita costs.

Within this framework, Berwick proposed that health care should be more integrated, acute care should be safer and more reliable, and we should invest more in preventive care. He suggested that community-by-community redesign of health care is the path toward health care transformation.

It was assumed that better care for individuals meant, among other things, access to coverage or coverage for all. And it had to be affordable. The designers of the ACA saw the individual mandate as the vehicle for eliminating barriers to universal coverage, covering the costs associated with it and bringing down costs.

As envisioned, the young, invincible and healthy will no longer be able to decide against procuring coverage. They will stabilize the risk pool by paying for coverage but not using much of it. The delivery system will then be capitalized such that it will be able to pay for the care of those less healthy, who will have guaranteed coverage.

Crafters of the ACA envisioned that with the decline in the numbers of uninsured, government subsidies to help offset hospitals’ and physicians’ losses in uncompensated care will be able to be eliminated. Some have suggested that those who are privately insured may even see their premiums reduced, since 22 percent of commercial insurance premium costs today are cost-shifted toward the costs of care for the uninsured.

If the court upholds the mandate, more individuals will likely procure coverage. However, some will opt for penalties rather than compliance. This will affect risk pool assumptions and make it difficult to eliminate the 22 percent cost-shift affecting the privately insured. The extent to which compliance becomes an issue threatens the ability of the ACA to deliver on Triple Aim objectives.

If the court rules against the mandate’s constitutionality, the financial model of the ACA is completely undermined. Commercial health plans will not stand for guaranteed issue under those circumstances. They will either leave the market or access for those with serious, pre-existing conditions will be threatened.

How to respect individual freedom (to procure or not to procure) and craft a proposal that addresses Triple Aim objectives in a system that is affordable is indeed nothing short of vexing.

There is no perfect solution. The hospital community has traditionally promoted universal access in a private sector health care delivery system.

Whether and to what extent the ACA will be able to deliver on Triple Aim objectives and whether the ACA survives in whole or in part depends greatly on the court’s decision in June, the marketplace response to it and, quite literally, future acts of Congress.

Julie Puentes is a Voice of OC Community Editorial Board member and regional vice president for the Hospital Association of Southern California.

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