Mandated Health Insurance Squeezes Those in the Middle

BOSTON -- President Barack Obama and his congressional allies have made insuring nearly all Americans a major goal of overhauling the nation's health-care system. One of their toughest challenges will be trying to cover people like Ron Norton of Worcester, Mass.
Opting Out in Massachusetts

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Bethany MacDonald, 3, is one of Massachusetts's nearly 200,000 residents who don't have insurance. Her family saves the money for medical expenses, instead of paying it to an insurer.

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Mr. Norton, 49 years old, is an adjunct professor at a local community college who earns about $40,000 a year. He's also one of roughly 200,000 Massachusetts residents who remain uninsured despite a state law requiring residents to have health insurance.

"I can't use up all of my savings just to buy mandatory insurance," Mr. Norton says. It's like penalizing "the homeless for refusing to buy a mansion."

As lawmakers hammer out legislation aiming to extend coverage to the country's 46 million uninsured, one of the most sweeping proposals has so far stoked relatively little debate: a requirement that nearly all Americans carry health insurance, much like drivers are required to have car insurance.

All of the major health bills winding through Congress feature a so-called individual mandate similar to the one in Massachusetts. Mr. Obama supported the idea in his speech to Congress last week. Such a mandate, proponents argue, is necessary to keep premiums affordable: The healthy, who are relatively cheap to cover, help pay for the sick.

Subsidies for premiums would help low-income families gain coverage, while the prospect of fines would prod others to buy insurance.

But people like Mr. Norton show how difficult it could be to bring into the insurance pool the millions of consumers who make too much money to qualify for assistance, yet not enough to bear the full cost of new policies on their own.

Three years after Massachusetts's ambitious universal-coverage law went into effect, two-thirds of its previously 600,000 uninsured residents have coverage, according to state data. It has the lowest rate of uninsured in the country -- about 3% according to a state survey, compared with 15% nationwide. But the remainder -- many younger, male and fairly healthy -- has proved tougher to cover.

Costs to expand insurance coverage in the state are growing rapidly because of higher-than-expected enrollment in free and state-subsidized plans, and rising health-care costs. Critics say the Obama plan could face similar problems, contending it doesn't do enough to control costs.
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In 2007 -- the first full year of the program -- the state exempted from the mandate 76,000 people it determined couldn't afford the cheapest plans available to them. An additional 68,000 had to pay a penalty for going without coverage -- a fine that has risen to $1,068 for the 2009 tax year.

On a national scale, pulling off an individual mandate could be more difficult. The Congressional Budget Office has estimated that as many as nine million legal American residents might still go without insurance under the initial House legislation released in July, despite its subsidies. The leading proposal in the Senate would place more restrictions on assistance, likely increasing the number who might go without insurance.

"If you're talking about millions of people who will have to buy insurance by themselves, this could be a difficult political issue," says Robert Blendon, professor of health policy and political analysis at Harvard University. "Unless subsidies are substantial, you're going to have middle-class resistance to this."

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