One of the big questions on the minds of many in Washington at the moment is: what comes after the individual mandate? Should the Supreme Court strike the requirement down but not strike down President Obama’s entire law, some substitute will likely be proposed by the White House and its allies in Congress.
Health policy expert Dean Clancy from Freedomworks offers an early rebuttal to possible alternatives to the individual mandate here:
First of all, the payroll tax. That’s just like what we have for Medicare and Social Security — money coming out of your paycheck. My guess is the ObamaCare payroll tax, if they create it, would equal about 8 to 10 percent of your wages. And of course, that would be on top of the 15 percent of your compensation you’re already paying in FICA taxes (I’m folding both the employer and employee shares into one number here). And we know the Supreme Court’s going to find that constitutional, ‘cause they already have. So that would be very straightforward. But it would also be hard to get through Congress, because who wants new taxes?
Now, the second idea is a late penalty. And basically how that would work is — let’s say you decide not to buy insurance, but later you change your mind. Okay, you can come in now; but for every year you’ve tarried, we’re going to charge you an extra 10 percent each month for the rest of your life. And by the way, that’s how they do it in Medicare Part B. It’s nominally optional, but it’s really basically mandatory: 98 percent of seniors sign up for Part B because of that pretty stiff late penalty. You could do that with ObamaCare.
Third idea, irrevocable opt-out. And what that means is you sign a piece of paper saying, “I don’t want to participate in this government health care system. I want to be out of the system, thanks very much.” And that’s irrevocable. You’re out, forever. Or more likely, what they would do is they would give you a chance, say, every five years, if you change your mind, to come in without penalty. And my guess is they’d also allow special times to come in, if you have a serious hardship or something. But otherwise, you would be on your own. I’m not sure the idea will work, but it’s out there.
And fourth, there’s auto-enrollment. And basically that means that either the government or your employer will automatically enroll you in an insurance plan, but you can opt-out if you really want out. And that’s the gentlest of the four options. And I predict that that’s the one you’re going to see talked about the most, if the mandate goes.
As Clancy points out, the policy response could involve any of these approaches as a standalone or a combination of them. It’s best, as he notes, to be prepared should these policies come forward in the aftermath of the SCOTUS decision. At the moment, the White House claims to not be working on any fallback plans.
