Universal Health Coverage Achievable Without Single Payer

Though it was vilified in electoral politics, the Affordable Care Act’s (ACA) individual mandate is the best way to achieve universal coverage.  And three nations with health systems that would be the envy of the US – offering affordable care, vigorously competitive markets, and universal coverage – show how an insurance mandate be the cornerstone to effective health policy, according to a Viewpoint published today in the Journal of the American Medical Association Regina Herzlinger of Harvard Business School, Barak Richman of Duke University’s School of Law, Fuqua School of Business, and the Duke-Margolis Center for Health Policy, and Richard Boxer of the David Geffen School of Medicine at UCLA.

The authors argue that Switzerland, Singapore and Germany have achieved universal insurance coverage, effective pooling of risk across populations, and an affordable cost through an individual mandate.  The Affordable Care Act (ACA) was a partial movement toward an individual mandate in the U.S., but it lacked effective penalties for nonparticipation that make for a more balanced risk pool where healthier individuals balance out the costs of others who require more medical resources. In 2014, about 7.5 U.S. residents chose to pay the penalty rather than purchase insurance, with the vast majority paying a penalty that was less than the cost of the least expensive plan in their market.

In Switzerland, those who fail to enroll themselves are enrolled by the government and the insurance companies hold individuals liable for the premiums (which are subsidized for low-income individuals and retirees).  Singapore requires employers to contribute to medical savings accounts, and unemployed individuals receive subsidies. In Germany, individuals must contribute 7.3 percent of income and unemployed individuals have their contribution taken out of their unemployment benefits (with some means-based subsidies). Those who fail to purchase insurance are liable for back premiums for the time they were uninsured.

Other common features in these countries include tax deductions for health insurance expenditures and competition between many more insurers in each market than is typical in the United States. As with the ACA, some financial support comes from employers and income-based subsidies.

These approaches based in individual responsibility, the authors argue, could stabilize the premiums and attain a universal insurance market in the U.S.