Insurers say coverage penalty has to have bite
WASHINGTON — The health insurance industry doesn’t want Congress to let you off easy if you decide to ignore a proposed requirement that all Americans must have coverage.
Determined to get as many people as possible covered, lawmakers first proposed fines of as much as $3,800 per family for health insurance scofflaws. But they have been steadily scaling back the penalties, with the Senate Finance Committee last week dropping them to $1,500 maximum per family in their version of a health care bill. The committee also phased the penalties in over five years with no fines at all in the first year and eliminated all criminal and most civil punishments for failure to pay.
The industry — counting on millions of more Americans buying insurance — says the penalties are now so weak they practically beg to be ignored. The result, the companies warn, is that people would wait until they get sick to buy coverage. That would raise premiums for everyone else, since Congress’ health care overhaul would also require insurers to take all applicants.
“People will drop coverage and those who stay in would see rate shock,” Karen Ignagni, president of America’s Health Insurance Plans, the insurance industry trade group, said in an interview Monday.
Alissa Fox, a top lobbyist for the Blue Cross and Blue Shield Association, said the Senate Finance Committee had “severely weakened” the proposed requirement to buy health insurance.
“It’s become an aspirational goal, because it’s a mandate with no penalty, and a mandate with no penalty is not a requirement,” Fox said.
The proposed new so-called individual mandate requiring everyone to buy health coverage or pay a fine is at the center of all the health care bills taking shape on Capitol Hill. After opposing it during his campaign for president, President Barack Obama embraced it earlier this year as the most effective way to get everyone covered as long as hardship waivers were included.
Subsidies would be provided to help low-income people afford the coverage. But many Democrats and consumer groups have begun to argue that the subsidies are not generous enough and that middle-income people still wouldn’t be able to afford health care.
“There’s no doubt there’s a trade-off,” between keeping down costs and getting more people covered, White House budget director Peter Orszag said Monday in an interview with The Associated Press.
That was a major issue for the Finance Committee as it wrapped up work last week on sweeping legislation to extend coverage to uninsured Americans and make major changes in the insurance market, such as barring insurers from charging women more or denying coverage to people with pre-existing conditions.
A final amendment to the Finance Committee bill addressed the affordability issue by exempting millions more people from the requirement to buy insurance, reducing and phasing in the penalties and getting rid of most legal repercussions if you don’t pay the penalties.
Originally, the bill required individuals and families to buy coverage as long as it cost no more than 10 percent of their income. Under the change, that would be lowered to 8 percent.
Sen. Chuck Schumer, D-N.Y., acknowledged the result would be an estimated 2 million additional individuals and families going without insurance in comparison with the original bill.
Insurers say the changes made the mandate toothless. And they’ve long argued that the only way they can keep premiums down while implementing the consumer protections like not charging more to sick people is by making sure that everyone is in the coverage pool.
“It might seem like they are solving the problem, but what happens is premiums for everyone are going to get more expensive in the new market,” said Fox.
“It only works when everyone is in the pool,” she added.
The Finance Committee is preparing for a final vote on its bill this week after which it will be merged with legislation from the Health, Education, Labor and Pensions Committee. In the House, lawmakers are working to meld health overhaul bills from three committees into one piece of legislation.
Insurers will be lobbying to strengthen the penalties. But on the other side, consumer groups say lawmakers still haven’t gone far enough to address affordability concerns.
Senators say they’re trying to balance the competing demands.
“We want to insure as many people as possible under this bill, but not in a way that forces people into plans they can’t afford,” said Schumer.
Sen. Debbie Stabenow, D-Mich., said, “We all have to be part of the solution and have health care, but we don’t want an onerous burden on individuals or families.”
Associated Press Writers Ken Thomas and Ricardo Alonso-Zaldivar contributed to this report.
Related News
Health care issues: Are insurance market changes enough to fix the health care system?October 5th, 2009 Health care issues: Insurance market overhaulA look at key issues in the health care debate:
THE ISSUE: Are changes in the insurance industry enough to fix problems in the nation's health care system?
THE POLITICS: To help expand health coverage, President Barack Obama is seeking changes to underwriting practices that can prevent Americans from obtaining affordable insurance. His proposals would ban higher premiums, caps or denial of coverage because of a pre-existing medical condition or when a person gets sick.
Gibbs: Public option just 1 way to achieve goal of health insurance for millions without itSeptember 13th, 2009 Gibbs: Public option 1 way to meet coverage goalWASHINGTON — White House spokesman Robert Gibbs says it's not true that a health care overhaul will affect people who already have insurance. He says President Barack Obama is determined that health care legislation provides Americans with a choice of insurers and competition for the companies that now dominate the market.
Health care issues: The public insurance planSeptember 8th, 2009 Health care issues: The public insurance planA look at key issues in the health care debate:
THE ISSUE: Should Americans have the option of getting health insurance from a government plan that competes with private companies?
THE POLITICS: Many Democrats want to do away with private insurance and replace it with something resembling Medicare coverage for all, but that's not politically feasible. Offering the choice of a government insurance plan was a compromise within the Democratic Party.
A look at health care plan from Sen. Max BaucusSeptember 8th, 2009 A look at Baucus health care planA look at a health care overhaul plan from Sen. Max Baucus, D-Mont., under discussion by six senators on the Finance Committee.
Consumer group says 2 health insurers illegally told workers to lobby against health reformSeptember 2nd, 2009 Group: Insurers urged workers to fight reformNEW YORK — A consumer group says health insurers UnitedHealth and WellPoint pressured their employees to contact members of Congress and lobby against health care reform proposals that the companies disagreed with. In a letter to California Attorney General Jerry Brown, the group Consumer Watchdog maintains both companies violated state labor laws.
Waxman, Stupak probe whether insurers dump small businesses that become expensive to insureAugust 31st, 2009 Democrats probe 'purging' of health coverageWASHINGTON — A top House Democrat is investigating whether the nation's largest health insurers have deliberately canceled coverage for small businesses after their employees became sick and sought expensive treatment. Rep. Henry Waxman, D-Calif., sent letters Monday to six insurers requesting details about their plans for small businesses and how coverage decisions are made.
Obama retooling health care pitch to emphasize consumer protections in visits to NC, VAJuly 29th, 2009 Obama: health plan to include consumer protectionsRALEIGH, N.C. — Senators reported progress on legislation to overhaul the nation's health care Wednesday as President Barack Obama introduced a retooled message asserting his plan would protect Americans and limit insurers' power.
A look at details of health care bill passed by the Senate health committeeJuly 16th, 2009 A look at the Senate health committee billA look at the Senate Health, Education, Labor and Pensions Committee:
WHO'S COVERED: Aims to cover 97 percent of Americans. COST: About $615 billion over 10 years, but it's only one piece of a larger Senate bill.
A measure of private health insurance coverage of Americans shows a 50-year-low, CDC saysJuly 1st, 2009 CDC: Private health care coverage at 50-year-lowATLANTA — The percentage of Americans with private health insurance has hit its lowest mark in 50 years, according to two new government reports. About 65 percent of non-elderly Americans had private insurance in 2008, down from 67 percent the year before, according to preliminary data released Wednesday by the U.S.
Obama uses network town hall to pitch health plan; Republicans complain they were shut outJune 25th, 2009 Obama says insurers profit with his health planWASHINGTON — President Barack Obama says insurance companies will make less profit on each patient if he gets his health care overhaul. But Obama says they'll make it up because they'll have more paying customers when the uninsured sign up for coverage.
GOP senators on key committee underscore opposition to public planJune 8th, 2009 GOP senators respond to Obama on health careWASHINGTON — Republicans on a key Senate committee are warning President Barack Obama that he's making a mistake on health care by supporting a government insurance option for the middle class. In a letter to Obama released Monday, all but one of the Republican senators on the Finance Committee reaffirmed their opposition to a public plan, suggesting that differences on the issue could doom chances for a bipartisan bill.
Obama wants additional cuts in Medicare, Medicaid to help pay for overhauling health careJune 3rd, 2009 Obama: Cut Medicare, Medicaid for health careWASHINGTON — President Barack Obama said Wednesday he wants at least $200 billion cut from Medicare and Medicaid spending over the next decade to help pay for overhauling the nation's health care system and providing coverage to 50 million uninsured Americans. The reductions in the programs would come on top of the $300 billion in cuts already proposed in his budget.
House Democrats weigh subsidies for families earning up to $88k and insurance mandatesMay 14th, 2009 House Democrats consider aid for health insuranceWASHINGTON — House Democrats are looking at big health care changes, including federal aid to help families earning up to $88,000 pay for insurance and a requirement that all must carry coverage. A document obtained by The Associated Press shows the plan being written by the House Energy and Commerce Committee would also require employers to offer coverage to their full-time workers, or pay a percentage of their payroll to the government.
House Democrats weigh subsidies for families earning up to $88k and insurance mandatesMay 14th, 2009 House Democrats weigh major health care changesWASHINGTON — House Democrats are looking at big health care changes, including federal aid to help families earning up to $88,000 pay for insurance and a requirement that all must carry coverage. A document obtained by The Associated Press shows the plan being written by the House Energy and Commerce Committee would also require employers to offer coverage to their full-time workers, or pay a percentage of their payroll to the government.
Health insurers offer to stop charging more to women if all Americans required to get careMay 5th, 2009 Health insurers try to head off public planWASHINGTON — The health insurance industry offered Tuesday to end its practice of charging higher premiums to women. It was the latest concession from health insurers as Congress works to overhaul the nation's $2.5 trillion health care system.
Loading ...