From msnbc.com's Tom Curry
Months from now, a federal appeals court or the United States Supreme Court might reverse Monday’s ruling by federal district court judge Henry Hudson that struck down the health care law’s requirement that individuals buy insurance (also known as the “individual mandate” in health care jargon).
For the moment, Hudson’s ruling has refocused attention on one of the crucial ingredients in insurance reform: improving insurance risk pools.
The health care law hinges on the millions of young and healthy people – good insurance risks -- who have decided they’d rather do without insurance.
Under the new law, 24 million people will be buying insurance through new purchasing “exchanges” regulated by the federal government. The more healthy people that the federal government can nudge into insurance risk pools, the lower will be the average cost in each risk pool. (As the Congressional Budget Office reported last June, “in the absence of a mandate, those who enroll would be less healthy, on average, than those enrolled with a mandate.”)
If the new people entering an insurance risk pool are less healthy, then the premiums will at some point become too costly for most members – or too costly for the taxpayers if the government is paying to cover the uninsured.
According to the Kaiser Commission, nearly one-third of the uninsured in 2007 were between ages 19 and 29. Paul Fronstin at the Employment Benefit Research Institute, a nonpartisan research group in Washington, said last year that bringing in the young and healthy uninsured would reduce the average cost of care “because you’ve brought in more people in paying (premiums), but not necessarily more people using health care.”
That’s why there was so much focus during the congressional debate last year on the so-called “young invincibles” – healthy people who go uninsured.
Sen. John Kerry, D- Mass explained it this way during the Senate Finance Committee debate last year: “It is critical to have what we call the young invincibles purchase coverage and come into the marketplace, because without them premiums are going to go up for everyone. If the insurers anticipate that they won't have a risk pool that is balanced between the older sicker and the younger healthier, then they will charge a (higher) premium that reflects the fact that they anticipate getting a sicker risk pool.”
The crucial money isn’t the revenue brought in by the penalties for being uninsured --$4 billion per year starting in 2017, according to the CBO -- but the flow of premium payments from those who were previously uninsured.
Obama knew that mandatory purchase of insurance would be a difficult idea to sell politically. In fact, he’d campaigned against the individual mandate in the Democratic primaries in 2008.
And, in selling his plan in 2009, he repeatedly emphasized its non-coercive aspect: “If you like what you're getting, keep it. Nobody is forcing you to shift,” he said.
Nonetheless he came around to the idea that forcing people to buy insurance was necessary. As he explained at a July 2009 press conference, “Unless you have a what's called a single-payer system in which everybody is automatically covered, then you're probably not going to reach every single individual, because there's always going to be somebody out there who thinks they're indestructible and doesn't want to get health care….. And then unfortunately when they get hit by a bus, they end up in the emergency room and the rest of us have to pay for it.”
Equally as important are those who don’t get hit by a bus: their premium payments help make the risk pools work.
Hudson’s ruling raised the possibility the overhaul would be unraveled if those young invincibles get the chance to opt out.