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Health Reform Ideas in the Primeval Soup
Unformatted Document Text:  24 recognize the political difficulties associated with attempting to move to the social insurance model. Political opposition to the employer mandate idea has grown among business groups, even surprisingly, those already offering insurance. There have been many indicators of a marginal decline in employment based insurance in recent years. 60 An employer mandate, perhaps combined with other ideas, is an approach to reverse such a decline, if there is the goal to retaining the current employment based system as much as possible. Most employer mandate proposals require the employer to arrange for group health insurance for employees, and pay for a substantial part of the cost. Other countries, such as Germany, basically utilize a payment mandate for employers combined with a public or semi-public insurance system. 61 The “play or pay” plan allows employers to choose between arranging for a group policy or paying a payroll tax to allow workers into a public program. Depending on the tax rate, this might be an especially attractive option for an employer with a high proportion of low-wage workers for whom premium costs would be a high percent of wages. In one form or another it appears the employer mandate idea will continue to be a significant idea in the policy soup. Individual Mandate Origins If someone who is driving a car with no auto liability insurance has an accident, the other party may not be able to recover damages without their insurance company bearing the full burden. This was a problem for the “other driver” as well as their insurance company, who was subject to higher risk. A generation ago states began to mandate that all drivers be covered by auto insurance. There are cracks in the system, but it does tend to eliminate “free riders” who fail to obtain insurance and take their chances with a serious auto accident. The simplicity and effectiveness of this approach for auto insurance has led some to conclude it is a useful model for health insurance. Members of the policy advocacy coalition who favor individual mandates argue that some of those who are uninsured truly don’t have the money to afford a health insurance policy, but others choose to be “free riders” who opt to spend their money on other goods or services. This segment of the uninsured, often young people, believe they will not become ill, or count on free care in the hospital system. During the 1993-94 debate on health reform Senator Chaffe introduced legislation based on the individual mandate idea. All individuals would be required to have health 60 John Holahan and Allison Cook, “The US Economy and Changes in Health Insurance Coverage 200- 2006”, Health Affairs Web Exclusive (February 20, 2008). 61 Stephanie Stock, “The Influence of the Labor Market on German Health Care Reforms, Health Affairs, (July-August 2006), pp. 1143-52.

Authors: Brasfield, James.
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24
recognize the political difficulties associated with attempting to move to the social
insurance model.
Political opposition to the employer mandate idea has grown among business groups,
even surprisingly, those already offering insurance. There have been many indicators of
a marginal decline in employment based insurance in recent years.
60
An employer
mandate, perhaps combined with other ideas, is an approach to reverse such a decline, if
there is the goal to retaining the current employment based system as much as possible.
Most employer mandate proposals require the employer to arrange for group health
insurance for employees, and pay for a substantial part of the cost. Other countries, such
as Germany, basically utilize a payment mandate for employers combined with a public
or semi-public insurance system.
61
The “play or pay” plan allows employers to choose
between arranging for a group policy or paying a payroll tax to allow workers into a
public program. Depending on the tax rate, this might be an especially attractive option
for an employer with a high proportion of low-wage workers for whom premium costs
would be a high percent of wages. In one form or another it appears the employer
mandate idea will continue to be a significant idea in the policy soup.
Individual Mandate
Origins
If someone who is driving a car with no auto liability insurance has an accident, the other
party may not be able to recover damages without their insurance company bearing the
full burden. This was a problem for the “other driver” as well as their insurance
company, who was subject to higher risk. A generation ago states began to mandate that
all drivers be covered by auto insurance. There are cracks in the system, but it does tend
to eliminate “free riders” who fail to obtain insurance and take their chances with a
serious auto accident.
The simplicity and effectiveness of this approach for auto insurance has led some to
conclude it is a useful model for health insurance.
Members of the policy advocacy
coalition who favor individual mandates argue that some of those who are uninsured truly
don’t have the money to afford a health insurance policy, but others choose to be “free
riders” who opt to spend their money on other goods or services. This segment of the
uninsured, often young people, believe they will not become ill, or count on free care in
the hospital system.
During the 1993-94 debate on health reform Senator Chaffe introduced legislation based
on the individual mandate idea. All individuals would be required to have health
60
John Holahan and Allison Cook, “The US Economy and Changes in Health Insurance Coverage 200-
2006”, Health Affairs Web Exclusive (February 20, 2008).
61
Stephanie Stock, “The Influence of the Labor Market on German Health Care Reforms, Health Affairs,
(July-August 2006), pp. 1143-52.


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