Post by Sapphire Capital on Mar 12, 2009 22:33:22 GMT 4
Administering Health Insurance Mandates
C. Eugene Steuerle
Urban Institute
Paul N. Van de Water
Center on Budget and Policy Priorities (CBPP)
January 30, 2009
Abstract:
Many current proposals to promote more universal health insurance coverage contain mandates that would require individuals to buy health insurance. Language is important here: some who oppose an individual mandate do not object to modest penalties for those who fail to purchase insurance. Other proposals would impose requirements on employers to provide or pay for coverage in addition to or instead of an individual mandate. "The general theoretical conclusion from economics," writes Mark Pauly, "is that there is likely to be very little difference, in the long run, between an individual and an employer mandate" (Pauly 1994). This argument rests largely on the notion that if the same ultimate tax or mandate is imposed on exactly the same activity, the ultimate economic incidence doesn't depend on who initially pays. People will eventually react to the same net incentives in the same way. In practice, however, significant differences arise between what can be implemented through charges on employers and on employees, often guided by practical issues of administration and how people respond to alternative administrative structures.
While well grounded in principle, mandates to pay for or purchase health insurance must confront important administrative challenges. Most important, for many people a mandate to purchase health insurance requires that they receive subsidies adequate to make the insurance affordable. At the same time, given the long history of less than full participation in means-tested benefit programs, administration of mandates and subsidies needs to be carefully coordinated and thought out. Both are difficult. In addition, since sizable penalties are hard to collect after the fact or at the end of the year, payments should be kept current and penalties modest. Among the available techniques are withholding, automatic enrollment, and relating the penalty to some other tax or transfer benefit that can be denied through simple administrative means.
This paper identifies ways to structure health insurance mandates, if adopted at the federal level, so that they are more likely to be administered fairly and effectively. In doing so, it draws on information about the administrative arrangements used in existing health insurance mandates in Hawaii, Massachusetts, the Netherlands, and Switzerland, as well as the administration of mandates proposed by California Governor Arnold Schwarzenegger, the New America Foundation, and Senators Ron Wyden (D-OR) and Robert Bennett (R-UT). The appendix to this paper provides detailed information about the administrative features of these existing and proposed mandates.
papers.ssrn.com/sol3/Delivery.cfm/SSRN_ID1340089_code1080954.pdf?abstractid=1340089&mirid=2
C. Eugene Steuerle
Urban Institute
Paul N. Van de Water
Center on Budget and Policy Priorities (CBPP)
January 30, 2009
Abstract:
Many current proposals to promote more universal health insurance coverage contain mandates that would require individuals to buy health insurance. Language is important here: some who oppose an individual mandate do not object to modest penalties for those who fail to purchase insurance. Other proposals would impose requirements on employers to provide or pay for coverage in addition to or instead of an individual mandate. "The general theoretical conclusion from economics," writes Mark Pauly, "is that there is likely to be very little difference, in the long run, between an individual and an employer mandate" (Pauly 1994). This argument rests largely on the notion that if the same ultimate tax or mandate is imposed on exactly the same activity, the ultimate economic incidence doesn't depend on who initially pays. People will eventually react to the same net incentives in the same way. In practice, however, significant differences arise between what can be implemented through charges on employers and on employees, often guided by practical issues of administration and how people respond to alternative administrative structures.
While well grounded in principle, mandates to pay for or purchase health insurance must confront important administrative challenges. Most important, for many people a mandate to purchase health insurance requires that they receive subsidies adequate to make the insurance affordable. At the same time, given the long history of less than full participation in means-tested benefit programs, administration of mandates and subsidies needs to be carefully coordinated and thought out. Both are difficult. In addition, since sizable penalties are hard to collect after the fact or at the end of the year, payments should be kept current and penalties modest. Among the available techniques are withholding, automatic enrollment, and relating the penalty to some other tax or transfer benefit that can be denied through simple administrative means.
This paper identifies ways to structure health insurance mandates, if adopted at the federal level, so that they are more likely to be administered fairly and effectively. In doing so, it draws on information about the administrative arrangements used in existing health insurance mandates in Hawaii, Massachusetts, the Netherlands, and Switzerland, as well as the administration of mandates proposed by California Governor Arnold Schwarzenegger, the New America Foundation, and Senators Ron Wyden (D-OR) and Robert Bennett (R-UT). The appendix to this paper provides detailed information about the administrative features of these existing and proposed mandates.
papers.ssrn.com/sol3/Delivery.cfm/SSRN_ID1340089_code1080954.pdf?abstractid=1340089&mirid=2