Did Schumer Cause The AHIP Freak Out?

The individual mandate (without the public option) has been a top priority of the health insurance industry. Who would not want millions of new customers to be forced to buy their very expensive product?

Sen. Chuck Schumer has been working to actively cripple or destroy the individual mandate. An amendment offered in the Senate Finance Committee by Schumer and Snowe reduced the penalty for not buying health insurance, and slowly phased in the penalty over several years. It also reduced the threshold at which a person could apply for a hardship waiver to avoid paying the penalty for not having insurance.

That was only step one in Schumer's attempt to water down the individual mandate. Last Thursday, Schumer made a barely covered announcement that he would seek to further weaken the individual mandate. The penalty collected from people for not having insurance would be placed in a trust fund instead of going directly to the government. Individuals would have up to three years to use the full penalty collected from them to buy insurance.

This three-year trust fund is just asking to be “abused.” It would create a strong incentive for younger people to wait until they got sick to buy health insurance. They could skip having insurance for up to three years without “losing” any money due to the individual mandate penalty. This is exactly the scenario that AHIP is desperate to avoid. If there is to be any Republican support for health care reform, and with progressives threatening to go to war if there is an individual mandate without a public option, it is very likely we'll see the individual mandate continue to be weakened as the bill moves forward.

I do not know if it was solely Schumer's plan to gut the individual mandate that caused AHIP to go on the attack. His efforts to get a public option, regardless how weak, could also pay a role in AHIP fury. I think it is likely Schumer's actions played a big role in the health insurance industry choosing to release their highly dubious study. Weaken the individual mandate and health insurance companies lose a huge potental source of profits from healthy, young Americans forced into overpriced insurance plans.

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