KHI News Service

Blue Cross exec defends individual mandate in federal health reform

Lack of a mandate of similar mechanism would wreak havoc in the insurance industry

By Dave Ranney | January 13, 2011

A top executive with the state’s largest health insurer on Thursday defended requiring most Americans to have health coverage by 2014.

“Our position is that we favor a mandate,” said Matt All, vice president and chief legal counsel at Blue Cross Blue Shield of Kansas.

All appeared before the Senate Financial Intuitions and Insurance Committee on Thursday.

Dropping the so-called individual mandate from the federal health reform law, he said, would “create a dangerous set of conditions,” noting that without the requirement, large numbers of people would be free to put off buying health insurance until they were sick.

Such an arrangement, he said, would wreak havoc in the insurance industry.

“It would be like, in the homeowners’ market, you wouldn’t want to have someone buy homeowners’ coverage when their house is just beginning to burn,” he said.

For health reform to work, All said, state and federal officials will have to find ways to “incentivize” people to purchase coverage when they are healthy.

“Now, we don’t believe that the individual mandate is the only way to do that,” he said. “But there’s going to have to be something in place.”

Health insurers, All said, are waiting on federal regulators to define how the mandate will be enforced.

The Affordable Care Act would require those who can afford health insurance to have it or pay a tax penalty. People who couldn't afford to buy insurance themselves would receive federal subsidies or be covered by Medicaid.

He disputed reports that the individual mandate would be a “boon” for health insurers.

“I have to say I have yet to sit in on a single meeting within our company or nationally where anyone has said, ‘Oh, good, there’s a mandate. We’ll get more customers,’” All said. “The entire conversation about the mandate is dealing with adverse selection and getting people to buy insurance when they’re healthy rather than waiting until they’re sick.”

Newly installed Kansas Attorney General Derek Schmidt, a Republican, sent a letter earlier this week alerting his counterpart in Florida that Kansas wants to join a legal challenge to the health reform law that claims the mandate is unconstitutional.

All and other insurance industry representatives who appeared Thursday warned that the federal health reform law, as it now stands, does not do enough to control health care costs.

“We see nothing in the document that’s going to lower health care costs,” said Scott Day, a spokesman for the Kansas Association of Health Underwriters. “The pressure is all on the insurance companies.”