Health Reform Mandates: House/Individual

This post is on the House health reform bill’s individual mandate. Posts on its employer mandate and those of the Senate bill are found under the “health insurance mandates” tag. My sources for this post are the Center on Budget and Policy Priorities (CBPP)  report by January Angeles and Judith Solomon, the Kaiser Family Foundation’s summary of the House bill, and a Health Affairs blog post by Timothy Jost.

Under the House bill individuals must purchase health insurance or pay a tax of 2.5% of their adjusted gross income above the income tax filing threshold up to the cost of an average insurance policy. 

The CBPP report has a very nice table that lists side-by-side the required premium contributions by income for the House and Senate bills. In brief (and ignoring a few small details) under the House bill families with incomes below 150% of the poverty line would be eligible for Medicaid for which there would be “very minimal” or no premium requirement. Premium contribution requirements for households with incomes between 150% and 400% of the poverty line follow a sliding scale from 3% to 12% of income. Wealthier families receive no subsidy. An individual with access to employer-based coverage is eligible for the premium and cost-sharing credits (described below) only if the cost of the employee premium exceeds 12% of the individual’s income.

The House bill also includes cost-sharing credits for families with incomes below 400% of poverty. The effect of these credits are summarized nicely in a table in the CBPP report and vary from providing 97% of the actuarial value of coverage (for those below 150% of the poverty level) to 70% (at 400% of the poverty level). In addition, there is a schedule of out-of-pocket spending limits that ranges from $500 (below 150% of the poverty level) to $5,000 (at 400% of the poverty level) (values doubled for families).

This concludes (for now) my flurry of posts on mandates under the House and Senate health reform bills. If you’ve stuck with me this far you earn a “Super Wonk Gold Star.” In summary, the House bill provides stronger employer and individual incentives for coverage through larger penalties. While premium subsidies are higher under the House bill in the range of 135%-250% of the poverty line they are lower elsewhere. On the other hand the House bill would provide more generous support for non-premium cost-sharing. Finally, the House bill’s employer mandate does not include any perverse incentives to avoid the hiring of individuals with low family incomes.

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