The recent health care reform law's most controversial provision is the individual mandate, which imposes a fine on individuals who fail to obtain a minimum level of health insurance coverage. Many object to this policy, arguing that the government shouldn't force individuals to purchase health insurance. Others believe that the mandate is a necessary component to health care reform. What has been missed in the discussion is that Congress could restructure the individual mandate to avoid the requirement that individuals purchase health insurance while still fulfilling its principal function. The principal purpose of the mandate is not to require individuals to purchase health insurance. Rather it is to prevent individuals from gaming a system that prevents insurers from excluding people with preexisting conditions and from fully differentiating prices for those with different levels of health. Proponents of the health care law do not care very much whether someone chooses to insure against future health costs or to self-insure against those future costs. But they do worry that individuals who decide to self-insure will ultimately renege on this decision when they require significant medical care. Self-insurers can renege either by not paying for medical services they receive or by buying into the insurance system after they have become sick.
Gregg D. Polsky,
Reconstructing the Individual Mandate as an Escrow Account,
Mich. L. Rev. First Impressions
Available at: http://repository.law.umich.edu/mlr_fi/vol109/iss1/9