By Peter Gosselin
The U.S. Supreme Court is about to rule on the constitutionality of the
individual mandate, a provision of the health-care overhaul law that requires
most Americans to obtain insurance coverage by 2014 or face penalties. The
Obama administration has declared it has no fallback plans if the high court
strikes down the mandate. The public policy community has followed the
administration in advancing no alternatives.
This Bloomberg Government Study seeks to fill the gap with a review of
potential alternatives to the mandate, including a detailed look at one
alternative — auto-enrollment, or what’s sometimes called “negative election.”
Under this arrangement, individuals would be automatically enrolled in a health-
care plan and begin having their share of its costs deducted from their
paychecks. They would have the right to opt out. This approach is widely used
by American employers to increase participation in retirement savings plans
such as 401(k)s.
The study finds that even if auto-enrollment performs at a lower level of its
effectiveness in retirement savings, it could offset much or all of the non-
group enrollment loss of six million people expected if the mandate is
overturned. It also could largely restore the mix of young and old, healthy and
unhealthy people that the mandate was intended to ensure and that’s needed to
make an insurance system work well. A moderately strong version of the policy
could restore all of the $20 billion in annual premium revenue U.S. insurers
would lose in the non-group market with the mandate’s failure.
Auto-enrollment could raise American employers’ administrative costs and
require the federal government to forgo some or all of the $113 billion in
employer penalties it expects to collect between 2012 and 2022.
The study finds existing law and regulation may encourage — or even require —
the use of auto-enrollment in health care. This could make the policy a viable
alternative to the mandate at a time when deep political divisions make new
health-care legislation unlikely.
For a complete look at the study visit us here.