With the individual mandate gone, we better develop a better solution

Though most Americans don’t realize it, Congress has repealed the ObamaCare individual mandate in a move that will cause health insurance premiums to rise, perhaps toward the dreaded “death spiral.”

Solutions exist, if Congress chooses to do the responsible thing and replace the mandate with something else.

{mosads}We all know that for health insurance to work, healthy people must buy it. Consumers know that eventually they will need health care, which is why in prior years, the “pre-existing condition exclusion” worked, even though people hated it. The provision was effective, though it had many drawbacks.  

Some people found themselves potentially uninsurable. Others found themselves in “job lock,” in which individuals with chronic disease stayed with a large employer rather than risking being uninsured.

Congress got rid of that policy as part of ObamaCare. Without the pre-existing condition, Congress needed a different way to induce healthy people to buy insurance, so lawmakers enacted the individual mandate. With that mandate now eliminated, the government’s nonpartisan scorekeepers estimate 13 million people who would have bought health insurance will now forego it.

As a result, premiums will increase by 10 to 20 percent because those who remain insured will be less healthy. Already, health insurance commissioners in both red and blue states are sounding the alarm.

Data from my organization, the Texas Medical Center Health Policy Institute, tell us 98 percent of people in the U.S. want insurance. But we need to “nudge” them in a way that reminds them they should get it. What reasonable alternatives exist?

The most promising incentive would be to offer credits in a health savings account to those who maintain their coverage. Essentially, the government would be “paying” healthy consumers to join the pool of insured people, thereby lowering costs for everyone.

A larger credit would garner more healthy customers, but of course, would cost this program more money. A careful analysis would determine the appropriate value of these credits needed to induce the right number of sign-ups without paying too much to get them.

Or we could consider House Speaker Paul Ryan’s 2016 proposal for a one-time open enrollment period that would allow anyone to sign up for coverage, regardless of health status. Under that proposal, consumers who didn’t sign up during yearly open enrollment could face higher costs for coverage of pre-existing conditions if they tried to get insurance in the future.

Another proposal from Ryan was if an individual experienced a “qualifying life event” (such as a new diagnosis of cancer) that person could not be charged a higher rate, as long as they remained continuously insured.

Other ideas have been floated too, each of which increase the price of health insurance if people don’t remain continuously insured. For example, the House-passed Affordable Health Care Act permitted a 30 percent surcharge for those who didn’t buy insurance within the specific enrollment period. But analysis revealed that fewer people would buy insurance with the 30 percent fine than without it.

That proposal, and others like it, suffer from the same flaw: The “stick” proposed doesn’t make sense.

Price hikes for consumers who wait too long to buy health care miss a fundamental point. People aren’t skipping health insurance because they don’t want it. They’re skipping it because they already consider health insurance too expensive. Making it even more expensive doesn’t solve the problem.

The mandate and pre-existing condition exclusions were flawed, but to an extent, they were effective. With both gone, Congress should now develop a creative solution to induce consumers to buy insurance, rather than penalizing them for being unable to afford it.

Of course, making health insurance more affordable is the best way to encourage people to buy it. Any future plan must deal with the cost of health care, otherwise, this effort is like rearranging deck chairs on the Titanic.

Dr. Arthur “Tim” Garson Jr. is a pediatric cardiologist, former medical school dean and director of the Texas Medical Center Health Policy Institute in Houston.