THE CONSERVATIVE REFORM...:

Obama's health insurance rule _ it was a GOP idea (RICARDO ALONSO-ZALDIVAR, 3/27/10, AP)

Starting in 2014, the new law will require nearly all Americans to have health insurance through an employer, a government program or by buying it directly. That year, new insurance markets will open for business, health plans will be required to accept all applicants and tax credits will start flowing to millions of people, helping them pay the premiums.

Those who continue to go without coverage will have to pay a penalty to the IRS, except in cases of financial hardship. Fines vary by income and family size. For example, a single person making $45,000 would pay an extra $1,125 in taxes when the penalty is fully phased in, in 2016.

Conservatives today say that's unacceptable. Not long ago, many of them saw a national mandate as a free-market route to guarantee coverage for all Americans -- the answer to liberal ambitions for a government-run entitlement like Medicare. Most experts agree some kind of requirement is needed in a reformed system because health insurance doesn't work if people can put off joining the risk pool until they get sick.

In the early 1970s, President Richard Nixon favored a mandate that employers provide insurance. In the 1990s, the Heritage Foundation, a conservative think tank, embraced an individual requirement. Not anymore.

"The idea of an individual mandate as an alternative to single-payer was a Republican idea," said health economist Mark Pauly of the University of Pennsylvania's Wharton School. In 1991, he published a paper that explained how a mandate could be combined with tax credits -- two ideas that are now part of Obama's law. Pauly's paper was well-received -- by the George H.W. Bush administration. [...]

Obama rejected a key part of Pauly's proposal: doing away with the tax-free status of employer-sponsored health care and replacing it with a standard tax credit for all Americans. Labor strongly opposes that approach because union members usually have better-than-average coverage and suddenly would have to pay taxes on it. But many economists believe it's a rational solution to America's health care dilemma since it would raise enough money to cover the uninsured and nudge people with coverage into cost-conscious plans.

...will just make the default choice a more cost-conscious option (HSAs).

Posted by Orrin Judd at March 27, 2010 5:56 AM