New changes to U.S. Senate health-care legislation would
significantly ease a requirement that individuals purchase
insurance, but policy experts raised concerns Friday about whether
it would fulfill the desired effect of making health coverage more
The bill, which Senate Finance Committee Chairman Max Baucus,
D-Mont., hopes to bring up for a final vote in the panel next week,
would issue financial penalties for people who don't purchase
Known as an "individual mandate," the requirement and penalties
are intended to spur individuals to buy insurance. Lawmakers hope
this would in turn create a larger pool of insured people and
therefore ensure the viability of proposed new insurance market
regulations requiring insurers to accept enrollees regardless of
their health status.
But an amendment approved to the health-care bill late Thursday
seeks to soften the impact of the mandate by lowering the highest
possible penalty, from a top level of $950 to $750 a year. The
penalty wouldn't apply at all until 2014, and it would gradually
increase each year until it reached $750 in 2017.
The amendment, offered by Sens. Charles Schumer, D-N.Y., and
Olympia Snowe, R-Maine, was approved by a 22-1 vote with only Sen.
Jon Kyl, R-Ariz., dissenting.
The amendment also states that if the lowest cost plan available
cost more than 8% of a person's income, that person would be exempt
from the individual mandate. That cap - known as the hardship
waiver - is lowered from 10% in the original version of the
Agreement on the amendment came after negotiations between
Schumer, who sought to lower the hardship waiver, and Snowe, who
expressed concerns about the level of the penalties in the
Schumer suggested that the changes were necessary because the
committee was unable to increase the size of subsidies to purchase
insurance. The best alternative, he suggested, is to make the
mandate less onerous.
"If you have to make a choice when there are limited dollars, it
seems to me this is the best choice," Schumer said.
A statement from Families USA, a group that advocates for
greater access to health care, praised the Schumer-Snowe amendment,
saying it would "insulate families from facing out of control
But Edwin Park, a senior fellow at the liberal-leaning Center on
Budget and Policy Priorities, suggested that the amendment would do
little to increase the affordability of health insurance for
low-income people. Lower-income people would still face the
question of whether to purchase insurance that is only partially
subsidized by the federal government or not carry insurance.
"The people who are now exempt from this mandate penalty are
going to be uninsured, so they have no coverage at all," Park said.
"The goal of health reform is to expand coverage."
Indeed, Schumer said Thursday that he had received estimates
from the nonpartisan Congressional Budget Office stating that, over
10 years, roughly 2 million fewer people would have health
insurance as a result of the lower threshold for the hardship
Also, some say it would have adverse effects on the insurance
market as well. Paul Fronstin, a senior research associate with the
Employee Benefits Research Institute, or EBRI, suggested that lower
enforcement penalties for the mandate would cause more people to
purchase insurance only when they are sick. EBRI is a nonpartisan,
nonprofit research group funded by private companies.
"It may cause more problems then you're solving," said Fronstin.
"If you're young and healthy, but you're expecting to have a baby,
you wait until you're pregnant to buy insurance."
A group of people entering the insurance market that is both
smaller and sicker could create problems for health insurers. The
companies have agreed to an array of proposed new regulations in
the insurance market, but only if a strong individual mandate
guarantees a large pool of insured people.
But the overall effect on insurance pools may not be dramatic,
according to Park. He pointed to a CBO estimate that, under the
Baucus bill, the amount of uninsured would be reduced by 29 million
people - a figure that puts the CBO estimate of how many would lose
insurance under the Schumer-Snowe amendment into perspective.
"You're still getting a pretty sizable pool," Park said.
Still, insurers are raising warning flags, saying that a smaller
number of people in the insurance rolls will raise costs throughout
the health sector. Robert Zirkelbach, a spokesman for the America's
Health Insurance Plans, or AHIP, trade group, said that it
"increases the likelihood that premiums are going to increase for
Leading insurers in AHIP include Aetna Inc. (AET), Humana Inc.
(HUM), Cigna Corp. (CI) and UnitedHealth Group Inc. (UNH).
-By Patrick Yoest, Dow Jones Newswires; 202-862-3554;