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Could Hawaii Prove Affordable Health Insurance Mandate Supporters Right?

One of the most controversial aspects of healthcare reform is the inclusion of an individual and employer health insurance mandate. Proponents of the mandate claim that it will help defray the increased cost of bringing millions of uninsured Americans into the fold. Affordable health insurance is most easily achieved when insurers are able to spread the cost of coverage among the largest pool possible. Without a mandate, there is the possibility that younger, healthier individuals will not buy insurance–leaving only the sickest individuals in most need of medical care insured. That will make the cost of coverage more expensive. Congress has provided for subsidies that seek to make health insurance policies more affordable, which serve as the carrot to motivate that demographic. However, the government also needs a stick: hence the mandates, which levy fines against individuals making over a certain annual income that refuse to buy insurance.

Detractors believe that such mandates are unconscionable infringements on the free market and will hurt young adults. Some even think that a national health insurance mandate is unconstitutional, and a group of Republican attorney generals from several states plans to ramp up a legal challenge on that portion of the bill. The individual mandate in Massachusetts has seen mixed results; there have been some improvements in affordability, but some people have chosen to pay up to a thousand dollars in fines annually instead of buying coverage–believing it to be cheaper, and not thinking they will need health insurance anytime soon.

Despite those concerns, a mandate of some type is necessary to get health insurance companies on board; their cooperation is essential with the death of a public option. Since increased regulation will prevent them from denying coverage due to pre-existing conditions, they do not want people to delay buying coverage until they are already sick and need expensive medical care. Their business model is dependent on the majority of people paying years’ worth of premiums into the system while they are not using much care.

Hawaii has taken a different path. Since 1974, the state has mandated that all employers over a certain size provide their employees with health insurance. The House of Representatives and the Senate have proposed similar mandates, with tax credits and exceptions for small businesses. In fact, the Clinton administration’s healthcare reform efforts were inspired by the Hawaiian system. As a result, most residents have health insurance.

How has Hawaii’s system worked? It has been surprisingly successful. Health insurance is one of the least expensive purchases on the islands, although costs are generally higher for everything else because of shipping expenses. Premiums and co-payments are some of the lowest in the United States. Supporters of their system point to the mandate, which results in a higher rate of insured, as the cause of their affordable health insurance. Emergency rooms are left for true emergencies, as opposed to being destinations of last resort where uninsured Americans cannot be denied care. Instead, non-emergency conditions are dealt with at earlier stages and a lower cost by primary care doctors.

The cost of covering a larger population has not been passed on to the federal government, either. When it comes to Medicare, Hawaii is the state with the least costly Medicare beneficiaries on an individual basis, even though their lifespans are longer than the national average. This is partially due to better comprehensive care for their population prior to their Medicare eligibility. Affordable health insurance policies drive insurance companies to have a greater focus on preventative care and promote wellness among patients. Therefore, Hawaiians may enter old age healthier, with fewer chronic medical conditions. On the mainland, Medicare must often play catch-up.

Most importantly, the affordable health insurance mandate does not appear to have hurt the quality of health care. None other than famed conservative commentator (and healthcare reform opponent) Rush Limbaugh recently praised the care he recieved in a Hawaiian hospital after being rushed there with chest pains. While his fortune and celebrity status may have had an impact on the attention paid to him, that wouldn’t have mattered if they had old, outdated equipment and inferior physicians. Moreover, Limbaugh did not note any lengthy waiting lists; even if he had bypassed them himself due to his fame, surely he would have noticed if others had been waiting in the emergency room for a long time. It is possible that once the dust settles, the Hawaii system may be the best method for nationwide healthcare reform.

(Image: NJ Scott under CC 2.0)

Yamileth Medina PhotoAbout Author
Yamileth Medina is an up and coming expert on Health Insurance and Healthcare Reform. She aims to help people realize that they can find affordable health insurance right now. Yamileth lives in Miami, FL.

Senate Bill Includes Health Insurance Plan Mandate for Construction Workers

A centerpiece of the Senate’s healthcare reform legislation is the creation of health insurance mandates. These provisions require employers with over a certain number of employees to either provide a health insurance plan to their staff or pay a fine. Under the current system, a majority of Americans receive health insurance through the firm they work for; reform in both the House of Representatives and the Senate includes federal subsidies to allow others to buy a health insurance plan themselves. Democratic legislators had to balance their goal of insuring as much of the country as possible with minimizing costs. In order to do so, they had to ensure that companies wouldn’t take advantage of the subsidized health insurance exchange markets and drop their existing coverage.

However, those crafting the bills have acknowledged that many small businesses are unable to afford a group health insurance plan for their workforce. Many of these businesses do not currently provide insurance. Therefore, businesses with under 50 employees are exempt from the $750 excise tax. This tax would otherwise be levied on a per-employee basis, if any full-time worker who used a federal subsidy to buy a health insurance plan. Right before the Senate version passed, a new exception was added into the mix.

Oregon Democrat Jeff Merkley proposed an addition to protect construction workers. In the construction industry, the majority of firms are smaller than the general threshold: 90 percent of them employ fewer than 20 people. Merkley’s provision limits the exemption for the industry to businesses with under five employees. Contractors who use union labor, regardless of their size, must often spend anywhere from 12.5% to 20% of payroll on a health insurance plan for their workers. Meanwhile, non-union contractors have the option of forgoing health insurance–this allows them to low-ball bids, which supporters of the exception claim will result in an unfair competitive advantage. Employees with the latter firms would have gone uninsured in the past, whereas now the federal government would pick up the tab for subsidizing their health care.

Tradespeople employed by contractors risk their health at a higher rate than typical office workers in other industries. Workplace injuries are more common for plumbers, electricians, construction workers, roofers, carpenters, and those in similar professions. While workman’s compensation insurance is a legal requirement for these firms, it often does not cover the complete expense associated with overuse injuries and other health problems not directly associated with an on-the-job injury. A quality health insurance plan may make them more effective employees in the long run.

Of course, some associations representing the building trades, including the U.S. Chamber of Commerce and the National Association of Home Builders, are unhappy with the last minute insertion. They believe that the mandate will result in tens of thousands of jobs lost, at a time when the unemployment rate is over 10 percent. Although small businesses will be able to take advantage of two years’ tax credits for buying a health insurance plan, trade associations believe that the credits will be insufficient. Republican Senators are also opposed to what they feel is a high amount of “pork”, or sweetheart deals for certain districts in exchange for votes. The Merkeley provision was, in fact, one of those 11th-hour deals struck by Majority Leader Harry Reid.

The House rejected a similar proposal during its own negotiations last fall. With a smaller majority, the Senate needed to shore up union lobbyist support. That constituency is increasingly concerned with the impact health care reform will have on their existing plans: by extending the length of time insurers must allow adult children to remain on a health insurance plan, as well as eliminating lifetime and annual limits on coverage, their costs will increase significantly. Labor unions also oppose the tax that the Senate plans to impose on the generous “Cadillac” insurance plans more prevalent among union workers. Democrats claim that such a tax is necessary in order to pay for part of the cost of healthcare reform. It remains to be seen if construction workers remain a special case when both chambers of Congress are finished combining their respective bills.

(Image: billjacobus1 under CC 2.0)

Yamileth Medina PhotoAbout Author
Yamileth Medina is an up and coming expert on Health Insurance and Healthcare Reform. She aims to help people realize that they can find a quality health insurance plan right now. Yamileth lives in Miami, FL.

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