Merrill Matthew’s WSJ Op Ed on the Indiv’l Mandate

Why Obama Should Drop the Insurance Mandate

Oregon Sen. Ron Wyden has a face-saving way out.


As Republicans look for ways to repeal or replace the Patient Protection and Affordable Care Act, President Obama would be wise to cut his losses now and signal he would support eliminating its individual mandate, which requires people to have health insurance or pay a fine.

The president faces a real dilemma. He campaigned against an individual mandate, yet it has become the signature provision of his signature legislation. That mandate has created a national backlash against him, Democrats and the entire health-care bill.

For all the prattle about how Democrats are confident the mandate will survive a constitutional challenge from more than half the states, they know a Supreme Court decision is a crapshoot, given the four-right four-left split and the unpredictability of Justice Anthony Kennedy. If the justices decide the mandate is unconstitutional, there is no telling how much of the rest of the legislation they might also kick out due to the bill’s lack of a severability clause.

In addition to the lawsuits, six states have passed legislation and two have passed a state constitutional amendment asserting that the federal government cannot tell their citizens they have to have health insurance or pay a fine.

Democratic Sen. Ron Wyden of true-blue Oregon, who once supported the individual mandate, has seen the handwriting on the election ballots and flipped. His new legislation, co-sponsored by Republican Sen. Scott Brown of Massachusetts, is one of the more intriguing efforts to reform ObamaCare. The health-care law currently allows states in 2017 to receive a waiver to opt out of the individual mandate if they meet certain benchmarks. Wyden-Brown accelerates that timeline to 2014, when the mandate goes into effect.

While Republicans hope to pass much more aggressive legislation eliminating or dramatically scaling back ObamaCare, I suspect many of them will also support Wyden-Brown as one more way to chip away at the legislation.

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Associated Press

Ron Wyden

Republicans could be joined by a number of Democrats from red-leaning states where senators—e.g., Claire McCaskill of Missouri and Ben Nelson of Nebraska—who initially dismissed their constituents’ opposition to the legislation are looking for ways to moderate their positions.

Would eliminating the mandate create "adverse selection" problems, where sick people wait until the last minute to get health insurance and healthy people drop coverage? Probably. But that will happen anyway because the penalty for remaining uninsured is so small. This is already happening in Massachusetts, which passed an ObamaCare prequel in 2006.

It is important to understand that the mandate is merely a clumsy way to fix a bigger problem in ObamaCare: the requirement that insurers accept anyone who applies regardless of medical condition.

Congress could mitigate that moral hazard by restricting individuals buying their own coverage—employer-based plans already accept all new employees—with a pre-existing medical condition to obtain or change coverage only during a six-week, annual "open season" enrollment period. Or they could pay an increased premium the longer they wait to get coverage, or both. Those options would not eliminate gaming, but they might reduce it.

If Congress eliminated the mandate, people would not have to buy the government-qualified coverage—unless they wanted government subsidies in the exchanges. That would free up employers and health insurers to offer coverage that employees and consumers want, rather than what the government demands. And if Congress restricted the requirement that insurers accept anyone to those inside exchanges, that would permit the market to function outside the exchange.

Getting rid of the mandate won’t fix all of ObamaCare’s problem. But it would be a good first step, while demonstrating that the president is finally willing to work with Republicans on health-care reform. And it would save the president from facing the indignity of the Supreme Court kicking out part—or all—of his signature legislation.

Mr. Matthews is a resident scholar with the Institute for Policy Innovation in Dallas, Texas.

Kevin Wrege

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