A culture of coverage

September 15, 2013

By Daniel Weintraub

The people who designed the Affordable Care Act employed an “If we build it” strategy reminiscent of the Field of Dreams, the classic 1989 film about an iconic baseball diamond built in an Iowa cornfield. If they built a more accessible health insurance system, the reasoning in Congress went, consumers would come and use it.

But will they?

Certainly older adults who don’t yet qualify for Medicare will take advantage of the chance to buy insurance at bargain rates if they don’t already get it from their employer. And people who are already sick and using a lot of health care – and paying for it on their own or going into debt – will flock to the new system.

The question is whether people who are young or healthy — or both — will be as eager.

And that is a very important question. If those people don’t buy coverage in the new online insurance marketplace – known as Covered California here – the system could implode. If only the sick and vulnerable buy coverage, the cost of their care might exceed their premiums, forcing insurers to raise prices in the second year and starting a spiral that could doom the entire project.

To prevent this, the new law attempts to nudge the undecided toward buying coverage by threatening them with a tax penalty if they go without.

But for some, doing the math might suggest they are better off going bare.

For example, an Orange County couple in their 40s with no kids and an income of $48,000 would pay about $300 a month for a plan with a $1,500 deductible per person and an annual cap on out-of-pocket expenses of $10,400 for the couple.

That adds up to $3,600 in monthly premiums — plus their co-pays for doctor and hospital visits if they got sick.

But the tax penalty for the same couple if they don’t buy insurance will be $480 in the first year, rising to $1,200 when the fines take full effect in 2016. So even after paying the penalty in year one, the couple would still be more than $3,000 ahead. They could use that money to cover unexpected medical costs or keep it for themselves if they stayed healthy.

And if one of them did get sick, the couple could still sign up for coverage the next year. Under the new rules, insurance companies would have to accept their application without regard to any pre-existing conditions, and they couldn’t be charged more because they had been sick.

So why would someone in that situation choose to buy a policy?

Enter the “culture of coverage.”

The hope is that over time, Americans will come to accept the idea that everybody should be covered, that people have a responsibility to get insurance, with help from the government if they need it.

Just as almost every homeowner now has home insurance (thanks to a requirement from lenders) and most motorists have liability insurance (thanks to a government mandate), the authors of the Affordable Care Act expect that in the years ahead people will take the idea of buying health insurance in stride.

They might have to pay more while they are healthy, but when they get sick, the coverage will be there for them and they will be saved from financial ruin.

“To be successful it requires a community norm in which insurance coverage is something valued, expected and accessible,” said Kim Belshe, a member of the board of the California Health Benefit Exchange, which runs Covered California, the new online marketplace in which individuals will be able to buy their insurance starting Oct. 1.

Belshe helped pioneer the idea of the culture of coverage as Health and Welfare secretary for former Gov. Arnold Schwarzenegger, who proposed a comprehensive health reform that included a mandate in 2007. Back then, many Republicans liked the idea of a mandate as a way to enforce personal responsibility. Without it, they said, some people could “free ride” on the rest of us, going without coverage and then, if they got sick, depending on government aid or relying on the health industry practice of shifting costs to paying customers.

Belshe still supports the mandate, but she says the requirement and the penalties are not the key to winning widespread support for universal coverage. She said most people want insurance, and those who don’t have it already are probably going without because they have been excluded due to their health condition or because they can’t afford it.

Belshe noted that the massive advertising and face-to-face outreach campaign that is about to begin in California to encourage widespread enrollment won’t focus on the mandate and the tax penalties.

“It’s not about saying ‘You’ve got to buy insurance, you’ve got to pay your taxes,’” she said. “That’s a more punitive message. That’s not what the research is telling us people are going to respond to. It’s about the importance and the value of health insurance, the availability of new options, the tools, the choices.”

That message will go forth on radio and television, through the internet and via churches, civic groups and community-based organizations. Thousands of people trained by the state will spread the message to family members, friends and neighbors.

But even Belshe says she does not know how long it will take before society embraces the idea, or even if the marketing campaign as now envisioned will ever work.

“Time will tell the extent to which that’s going to be enough,” she said.

If it’s not, supporters of the new system might well have to go back to the drawing board.

Daniel Weintraub has covered California public policy for 25 years. He is editor of the California Health Report at www.healthycal.org. Reach him at Daniel.weintraub@gmail.com

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