Repeal Individual Mandate? Washington State Has Been There, Done That

In the 1990s, Washington’s individual insurance market required carriers to sell to everyone, but the market crashed when Republicans repealed a provision that everyone buy insurance. Instead, Republicans and Trump may bring back health underwriting and allow insurers to charge higher rates to sick people or end the employer mandate, forcing more people onto the individual market.

For Republicans champing at the bit to repeal Obamacare -- particularly the hated individual mandate, which slaps a tax penalty on those who go without health insurance -- they may want to look to Washington state and see what a disaster that would be, to both consumers and the health insurance industry alike.

On 60 Minutes Sunday, President-Elect Donald Trump backpedaled on his promise to replace and repeal Obamacare -- telling Lesley Stahl that he would keep the parts people like, including the requirement that insurers keep offspring on their parents’ health plan up to age 26 -- and he would keep the ban on insurance companies denying people coverage because of pre-existing health conditions such as diabetes or HIV.

But keeping the requirement that insurers cover people with chronic conditions -- guaranteed issue -- while repealing the mandate on purchasing insurance -- is not just a hypothetical scenario assailed by egghead policy wonks as unworkable -- it’s already been tried in the Evergreen State.

In 1993, Washington passed a comprehensive health insurance law that was an early precursor of Romneycare/Obamacare -- it required guaranteed issue with a phased-in individual mandate. But after the Republicans took power in 1994, they repealed the mandate while keeping the good parts.

Individual insurance rates nearly doubled, year-after-year. Healthy people fled the market. Health insurers fled the state. “They suffered greater and greater losses,” said Professor Aaron Katz, a policy expert at the University of Washington in Seattle.

And by 1999, every last company balked at providing individual health insurance in Washington. Gov. Gary Locke and the Democrats had no choice but to repeal the rest of the 1993 law.

“The insurers said, ‘We’re losing too much money and getting adverse selection,’” Katz recalled. “All the insurers stopped selling individual coverage, forcing the Legislature to retrench. … These various pieces of the pie that the Affordable Care Act has created, many of them don’t work on their own. Repealing one has many, many tentacles of effects.”

Trump and the Republicans, pressured by lobbyists from America’s Health Insurance Plans, may realize how repealing the individual mandate would blow up in their face, making them responsible for millions of Americans losing their access to healthcare.

Jonathan Gruber, a health economist at the Massachusetts Institute of Technology, and a chief architect of the ACA, suggested in The New York Times that the Republicans could instead try a more sinister approach -- keep the individual mandate, but bring back health underwriting.

This would allow health insurers to charge high cost patients, such as women with breast cancer, much higher premiums than others and and/or make their coinsurance so unaffordable, consumers would essentially be buying insurance policies that weren’t worth anything when their lives literally depended upon them.

“It would make things worse for anyone looking for insurance,” Katz agreed. “We’d have the same situation as before, with many more people uninsured who do need medical care.”

Rick Skayhan, an insurance broker at Leonard Adams Insurance in Portland, said something was going to give. He believes the individual mandate is imperiled, but moreso its counterpart on business -- the mandate that employers with 50 or more employees offer health insurance.

“The employer mandate is hated. I think it’s going to go,” he said.

This wouldn’t necessarily be all bad -- many have long lamented America’s unique system that binds health insurance to employment. If employers were stripped of the requirement to provide health coverage, millions of Americans would get dumped on the individual health insurance market where they would likely end up with an inferior health plan to what their employers had offered.

Skayhan could foresee the Republicans actually expanding the tax credit to encourage people to participate, or possibly turning the subsidy into a dollar amount that individuals could write off their taxes.

Adding millions of people onto the individual market would help spread risk for health insurance companies, and people currently receiving employer-sponsored health coverage are generally healthier than the people shopping on the individual market.

Assuming the Republicans can repeal Obamacare also rests on two other assumptions -- the Republicans will end the Senate filibuster and that Congressional Republicans -- long at odds with the celebrity showman now set to run the country -- can actually get along well enough with President Trump to govern.

Eleven years ago, President Bush had a Republican Congress but when he tried to privatize Social Security, he ran into a buzzsaw and failed.

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