Washington may attempt an individual mandate, if Supreme Court cuts it

Jun 20, 2012

A Supreme Court ruling on President Obama’s health care law could force Washington state lawmakers to shift gears. They want to prevent a repeat of the 1990's, when the insurance market "went over a cliff," says the state Insurance Commissioner.

That could force them to require state residents to have health insurance. But, their first choice to prevent a health-care "disaster," say Democrats, is to rely on federal subsidies to keep insurance affordable.

On the other hand, if the Supreme Court upholds the federal health law, the Affordable Care Act, Washington state already has been implementing many aspects and is on a fast-track to providing discounted insurance for thousands of uninsured people by January 2014.

Many are betting the Court will strike down the most controversial part of the law—the federal “individual mandate.” That’s the requirement that everyone must have health insurance, or else pay a tax penalty. Without that mandate, other aspects of the law are in trouble, such as rules that prevent discrimination against people with pre-existing medical conditions.

Lessons from the crisis of 1998

Washington learned some hard lessons in the 1990’s about what happens if you partially repeal a major health-reform law, says Rep. Eileen Cody (D), of West Seattle, who’s chair of the House health committee in Olympia:

 “Without the individual mandate, we saw the individual market fall apart. So, we do know what happens if you don’t have everyone participating.”

Back then, during the Clinton years, Washington had consumer protections without requiring everyone to have insurance. So, if the price of insurance was too high or didn’t seem worth it, you could wait until after you were sick, or pregnant, and then buy at the last minute.

“That was probably the number one issue, pregnancy,” says Washington Insurance Commissioner Mike Kreidler. “Families would sign up for health insurance at the time they were pregnant, then for delivery, and even for prenatal, they would have coverage. Then after baby was born, many  would wind up then dropping health insurance.”

One woman from eastern Washington famously wrote to Premera Blue Cross, thanking them for wonderful service during her pregnancy, and saying she was cancelling ... until she got pregnant again. If a lot of people do that, the company loses money.

“It was a big crisis no question, it caused the market to totally collapse in 98 and 99,” says Kreidler.

The insurance companies just quit selling.

Money can solve everything

Now, State Sen. Karen Keiser (D), of Kent, who chairs the senate health committee, thinks the rest of the reforms could survive without the individual mandate – thanks to money.

“If the individual mandate is set aside by the court, Washington state and other states can move forward. We are in a very good position, because we have already received the federal funds to not only build our health-care exchange, or marketplace, but to operate it for the first year,” she says.

The exchange is a new way of selling health insurance, making it easier to comparison shop, like buying an airline ticket at an online site such as Expedia or Travelocity.

The secret ingredients that make the exchange work are federal subsidies. If you’re low-income, or even middle-income in some cases, you’ll get federal help to buy health insurance through the exchange.

Cheap insurance is a strong incentive, “the carrot we need,” to get people to buy insurance, says Rep. Cody.

(Will you qualify for a subsidy? You might be surprised by this personal calculator from the Kaiser Foundation)

So, in the view of state leaders, who all happen to be Democrats, as long as Congress keeps the subsidies, Washington could have a few years to figure out how to make all this work — even if the supreme court strikes down part of the law.

A Republican view

If Republicans win control of the state Senate this fall, they’d like to keep some of the reforms in place.

“I don't want to throw away all the millions of dollars that we've been able to utilize here and do some really good things,” says Sen. Randi Becker, of Eatonville in Pierce County, who could become chair of the health committee.

Republicans would strip away a lot of the rules on insurance and doctors, hoping to lower the cost of medical care and of insurance, she says.

Becker isn’t giving more details at this point about how she’d balance the trade-off between protecting people with pre-existing conditions from discrimination versus making sure they don’t repeat the strategy of the 1990's – when people were buying insurance only when they needed it and at the last minute.

Preventing another crisis

If the insurance market shows signs that it’s filled with only sicker people, then state intervention becomes inevitable.

One idea from the Insurance Commissioner’s office is to have limited “open enrollment” periods, so that you can only sign-up for insurance one month per year.

Another option is to copy Massachusetts, and create a Washington state individual mandate. Democrats Cody, Keiser and Kreidler all say that’s a possibility. Republicans, says Becker, are now flatly opposed to any requirements about buying insurance.

On the Web:

The video below shows how health insurance will work under the Affordable Care Act: