Health Reform Mandates: Senate/Individual

This post is one in a series on the employer and individual mandate provisions of the House and Senate health reform bills (all listed under the “health insurance mandates” tag). The focus of this post is the Senate’s individual mandate, and my sources are the recent Center on Budget and Policy Priorities (CBPP)  report by January Angeles and Judith Solomon, Timothy Jost’s Health Affairs blog post, and CBO’s analysis of the bill.

The Senate health reform bill would require individuals to maintain “minimal essential coverage,” which can be satisfied via public insurance (e.g. Medicare, Medicaid, VA) or private employer- or individually-obtained coverage. The penalties for lack of coverage are small (relative to typical premiums): $95 in 2014, $350 in 2015, $750 in 2016 and increasing thereafter. For each uninsured dependent the penalty increases by half these amounts, though in total cannot exceed three times these amounts. Jost further explains that

[t]he penalty does not apply to persons who have to pay more than 8% of their income for insurance after applying the affordability credits, those uninsured for less than three months, persons with incomes under 100% of poverty, members of Indian tribes, and persons who receive a hardship waiver.  A person who refuses to pay the penalty cannot be criminally prosecuted.

The CBPP report has a very nice table that lists side-by-side the required premium contributions by income for the Senate and House bills. In brief (and ignoring a few small details) under the Senate bill families with incomes below 133% of the poverty line would be eligible for Medicaid for which there would be no premium. Premium contribution requirements for households with incomes between 133% and 300% of the poverty line follow a sliding scale from 4% to 9.8% of income. The 9.8% value holds up to 400% of the poverty line. Wealthier families would receive no subsidy. Subsidies are available only for coverage through an exchange and implemented as refundable tax credits. 

Individuals and families at various levels of income up to 400% of the poverty line would receive coverage (and subsidies for coverage) tied to specific actuarial values of generosity. Cost sharing varies across type of coverage (“platinum,” “gold,” “silver,” and the like) and is summarized nicely in a table in the CBPP report. For all income levels the actuarial value of coverage under the Senate bill are no higher (and typically well below) that of the House bill. This relatively lower level of generosity is the subject of some criticism.

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