Backers doubt states will find alternatives to healthcare mandate

The staunchest supporters of healthcare reform say President Obama’s challenge this week for states to pitch their own reforms is a crafty political move that bolsters the case for the so-called individual mandate.

They say a viable alternative to the healthcare reform law’s requirement for individuals to purchase insurance is unlikely to emerge from a proposal to allow states to opt out of the law within three years, which Obama endorsed under certain circumstances.

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“There are alternatives I can think of where you can cover a lot of people, but it would not cover nearly as many people and you spend as much money,” said healthcare economist Jonathan Gruber, who advised President Obama and former Massachusetts Gov. Mitt Romney (R) on their healthcare reforms.

“This law could function with alternatives, but it functions so much worse it would be crazy to do so,” Gruber told The Hill.

Failure to develop an alternative to the individual mandate could be bad news for centrist Senate Democrats facing tough elections in 2012. Sens. Joe ManchinJoe ManchinSenator responds to criticism of daughter's EpiPen company The Hill's 12:30 Report Dem Senate candidate: Toomey 'playing politics' with guns MORE (D-W. Va), Claire McCaskillClaire McCaskillSenate Dem: You can say Trump and his 'friend' Putin founded ISIS Sunday shows preview: Trump's tough week McCaskill blasts Gingrich for comparing Trump to Truman MORE (D-Mo.) and Ben Nelson (D-Neb.) – all up for reelection in 2012 – have expressed considerable interest in finding alternatives to the individual mandate.

Obama offered the endorsement during an address to the nation’s governors, saying he would support accelerating the states’ ability to opt out of his signature healthcare law if they can offer insurance alternatives that meet the law’s coverage and affordability targets.

Obama was endorsing a proposal originally pitched by Sens. Scott Brown (R-Mass.) and Ron WydenRon WydenWhy you should care about National Whistleblower AppreciatIon Day Dems push to require presidential nominees to release tax returns Legislators privacy fight coincides with FCC complaint MORE (D-Ore.) that would allow states to get a federal waiver in 2014 instead of 2017, as the law currently prescribes.

A Kaiser Family Foundation survey last month found that two-thirds of adults oppose the individual mandate, which the law’s backers say is the cornerstone to making the entire healthcare reform package work. Without requiring everyone to purchase insurance, they argue, healthy people would wait until they were sick to buy coverage because the law bans discrimination against preexisting conditions.

“The simple fact is that the healthcare system and this part of the law works better if everyone has health insurance,” said Ethan Rome, executive director of the pro-reform Health Care for America Now.

When approached by The Hill this week, Medicare chief Don Berwick declined to say whether he thinks that states will propose individual mandate alternatives that the administration would support.

“I think we’re going to see creativity,” Berwick said. “The invitation is for the states to come up with their own approaches to exactly do what the Affordable Care Act wants to accomplish without compromising on coverage or affordability or the number of people being covered.”

However, it’s unlikely that the waiver bill will make it through Congress. House Republicans, more focused on efforts to derail the law, quickly refuted claims that the bill would provide flexibility for states to develop their preferred healthcare reforms. 

“Perhaps states could opt out of some consumer or employer mandates, which is a minor release valve,” the Wall Street Journal’s conservative editorial page wrote this week. “But they would still need to find other mechanisms to achieve the same liberal priorities, which in practice leaves little room to innovate—especially for a straight tax deduction or credit to purchase individual coverage or alternative insurance designs like high-deductible or value-based plans.”

If anything, states with more liberal healthcare reforms would likely be the biggest winners under the state opt out. Vermont lawmakers say an earlier waiver would allow their state to develop a single-payer system this year without having to dismantle it in three years, when the individual mandate becomes effective. 

In the end, Obama’s support for earlier waivers may wind up being more a political tactic than anything.

“I think it really does at one level call the bluff of opponents of the bill because what it really does is say, ‘Look, this does the best possible job covering people with health insurance at the lowest costs,’” Gruber said. “If states can figure out a way to cover as many people at lower government cost, then go for it. I think what you’ll find is you can’t do that.”