On Monday night, Jon Stewart interviewed Health and Human Services Secretary Kathleen Sebelius, and he kept pressing her on why the Obama administration put a one-year hold on the health-care law’s mandate that employers provide insurance to their workers without offering a similar delay to the requirement that individual Americans have health coverage. In the midst of Sebelius’s too-complex answer to a not-as-easy-as-it-sounds question, Stewart exclaimed, “Am I a stupid man?”
No, Jon Stewart, you aren’t a stupid man. You just don’t know what you’re talking about.
“I would feel like you are favoring big business because they lobbied you,” Stewart also said, “but you’re not allowing individuals that same courtesy.”
Jon Stewart isn’t the first person to indulge in the myth that Obamacare’s individual mandate and its corporate mandate are equivalent in importance, and that delaying one means its only fair to delay the other. Republicans have pilloried President Obama on the same grounds for months. What all of these critics miss is that the system the Affordable Care Act (ACA) constructed doesn’t work without the individual mandate. The corporate mandate, on the other hand, isn’t necessary.
The big idea behind Obamacare is that everyone needs health care some time, even if they don’t pay for it, so everyone already participates in the health-care system in some way. A better way to organize that participation is to require everyone to join with a group of people and pay something into a common pot. In exchange, they get coverage for when they need to see the doctor, financed by that pool of money. People who have health-care insurance already do this. Under the law, insurance companies are still the ones who sign up new people and administer their benefits. But those companies can’t turn people away for pre-existing conditions or jack up rates for many of the reasons they used to, and the government will provide subsidies for people who can’t afford coverage.
The whole scheme won’t work, though, if only the most motivated people — those who already know they are sick — sign up. Rates for participating in the insurance system would go way up, a bill that better-off insurance buyers and the government would have to pay. To ensure that all Americans, not just the sick ones, are part of an insurance pool, the government will require people to make sure they get coverage from somewhere and help those who can’t pay for it. This isn’t just about making the policy work; there is also fairness to it. Everyone will pay something into the system from which they benefit, if they can. Suspending the individual mandate would blow a hole in the policy.
“Delay,” write the Urban Institute’s Linda J. Blumberg and John Holahan, “would reduce insurance coverage, increase average premiums in the non-group and possibly the small-group insurance markets, and increase the government cost per newly insured person.”
Meanwhile, the two researchers write in another paper, “delaying the employer mandate has almost no effect on overall coverage under the ACA or the distribution of that coverage across public and private sources of coverage.”
The corporate mandate is mainly in place to prevent companies that already offer insurance from taking away that coverage. Many health-care economists aren’t too worried about this. That is, firstly, because employers have reasons to continue compensating their workers with health-care coverage rather than, say, higher wages. Firms, for example, get a tax break for offering insurance. And, secondly, because even if they did take away coverage, their workers would still be able to go into the marketplaces the law set up and buy insurance on good terms and with government help. Other than history, there’s no great reason employers are part of the health-care system at all, and the law doesn’t need to keep them in it.
The lazy populism that Stewart and Republicans are peddling has a nice ring to it. But that’s about it.