Four Myths -- and the Truth! -- About the Individual Mandate

Last week, the Obama administration announced that it was delaying the "employer mandate" in the Affordable Care Act, the part that requires large employers to provide health insurance to their employees. The employer mandate was supposed to take effect in 2014. Now, it's scheduled to begin in 2015.This week, Congressional Republicans have responded by demanding that the "individual mandate" be postponed a year as well. This proposal has prompted a debate filled with misunderstandings and misleading propaganda. Here's the truth behind the myths...Myth #1: Next year, everyone who doesn't have health insurance will have to pay a $2,000 penalty.The most basic problem with the individual mandate is that no one seems to know exactly what it is. I've heard people throw out all sorts of numbers, most of which make it sound more expensive than it really is.Here's what the ACA actually says: Next year, in 2014, every adult who doesn't have health insurance will have to pay a $95 penalty. Every child will have to pay $47.50. If you file taxes as a family instead of an individual, the penalty is $285 or 1 percent of your family's income, whichever is greater.That's a far cry from $2,000.In 2015, the penalty goes up to $325 for adults, $162.50 for children, and $975 or 2 percent of income for families. In 2016, it reaches its peak of $695 for adults, $347.50 for children, and $2,085 or 2.5 percent of income for families. That's probably where the $2,000 figure came from. As you can see, it's not nearly as burdensome in the proper context.Myth #2: The individual mandate can be postponed with little or no negative consequences.Beginning on January 1, 2014, insurance companies will no longer be able to charge different premiums to different consumers based on health status, a.k.a. "pre-existing conditions." The only factors they can consider in setting premiums are geography, age, tobacco use, and individual versus family plans.They cannot charge women more than men. They cannot charge sick consumers more than healthy ones. They cannot charge you more if you work in an industry that happens to have higher health care costs. They cannot raise your premium if you've gotten sick while you've been on their plan.This is one of the most popular parts of the ACA. It appeals to our sense of basic fairness. Most Americans consider it an outrage that insurers have been discriminating against women and the sick.But there's a problem with these new rules: If insurers charge the same premiums for healthy and sick people, the healthy ones can no longer pay the cheaper rates they've been used to. As a result, they won't buy insurance, leaving only the sick people in the pool. Sick people are expensive for insurers. They receive more health care than they pay for. Insurers will have to raise premiums in what is known as a "death spiral," making insurance unaffordable for everyone.That's why we need the individual mandate. In order for these new rules to work, everyone has to buy insurance, including healthy people. If Congressional Republicans get their way and postpone the individual mandate, we could be looking at astronomically high insurance premiums in 2014.Myth #3: The individual mandate was first invented and proposed by Democrats.In October 1989, the conservative Heritage Foundation, a leading Republican think tank, published the first policy paper proposing an individual mandate. In November 1993, Republican Senator John H. Chafee introduced the first bill in Congress that contained an individual mandate. The bill had 18 Republican co-sponsors.The individual mandate was a Republican invention from a time when it was not yet heresy for a Republican politician to advocate providing affordable health insurance to every American without a government takeover of the industry.Myth #4: The individual mandate is socialized insurance.Why are we still talking about Canada and England? Just the other day, I received an email from a Republican reader reciting the problems with government-run health insurance. So what? ObamaCare is nothing like the Canadian or British system.The individual mandate requires Americans to buy private insurance. That's why insurance companies have posted double-digit gains on the stock market since the ACA became law. The values of Aetna and UnitedHealth have nearly doubled in only three years.In fact, no major American politician is proposing a government-run system. Like it or not, private insurance will be around for a long time to come. The only question is, will everyone be able to afford it?==========An abbreviated version of this op-ed was published in yesterday's South Florida Sun-Sentinel.