force-feeding health insurance: labor and the push for individual mandates

COMMENTARY

FORCE-FEEDING HEALTH INSURANCE: LABORAND THE PUSH FOR INDIVIDUAL MANDATES

Benjamin Day

The Massachusetts Health Care Reform Bill passed into law in July 2006contained the first “individual mandate” provision enacted in the United States.An individual mandate requires uninsured or underinsured people above acertain income level to buy their own health care in the private market or facestiff penalties. The Massachusetts version will require anyone without a certainlevel of health insurance coverage to lose their personal tax exemption in its firstyear of implementation, and starting in 2008, will fine individuals half the priceof the cheapest health plan: this will be in the neighborhood of $1,000 per year.The original House version of the bill would have revoked peoples’ driver’slicenses if they lacked insurance coverage. The sting of such a stiff penalty, intheory, was supposed to be softened by state subsidies for lower-income families:up to 300 percent of the federal poverty level.

Not much is known about how individual mandates will work in practice,given their incredibly punitive enforcement mechanisms. There is already,however, a disturbing trend in progressive support for the mandate concept—particularly from a number of labor leaders. Progressive and labor stirrings onbehalf of individual mandates have emerged largely out of an attempt to winbusiness support for universal health care initiatives. Much like the coalitionbehind the failed Clinton initiative, unions are breaking ranks from the singlepayer movement—the system that has guaranteed quality health care coverage asa right in most of the developed world, while at the same time reducing costs—inthe hopes that a more incremental approach will prove politically more feasible.And so, individual mandates are typically couched in a rhetoric of “sharedresponsibility” within which employers are also expected to become reliablecontributors toward the health care system.

What appears to be a politically pragmatic approach, particularly amongunions oriented toward partnership with businesses, is based on a lack of

WorkingUSA: The Journal of Labor and Society · 1089-7011 · Volume 10 · June 2007 · pp. 239–249© 2007 The Author(s)

Journal compilation © 2007 Immanuel Ness and Blackwell Publishing, Inc.

understanding about what a mandate policy would mean for the working class inpractice and also how such a policy compares to alternative means of expandinghealth care coverage.

A national version of the individual mandate has already been introduced toCongress by Oregon Senator Ron Wyden, unveiled at a press release starringService Employees International Union (SEIU) President Andy Stern andunion-busting Safeway CEO Steve Bud—whose supermarket chain recentlybroke a strike by Southern California supermarket employees to maintain theirhealth care benefits, a loss that is being patterned across the country.

Andy Stern has taken this partnership a step further in launching a “BetterHealth Care Together” initiative that has brought big name national employers,unions, hospitals, and insurance companies together behind a set of four prin-ciples for health care reform, one of which begins: “We believe individuals havea responsibility to maintain and protect their health . . . [I]n a reformed system,it is fair to expect that people take care of themselves as best they can, given thatothers are asked to share the cost of illness when it occurs.” The initiative—supported by the SEIU, AARP, The Business Roundtable, Wal-Mart, AT&T,and others—while lacking in specific details, embodies the new language of“shared responsibility” borne of the Massachusetts reform.

At the state level, a California bill championed by Governor Schwarzeneggeralso relies on a Massachusetts-style combination of individual mandates, statesubsidies, and cost control. State after state is now pushing the concept as a wayof moving toward universal health care coverage.

Public discourse tends to revolve around the question of whether this is acivil liberties issue or not—whether it is right or wrong to force people to pay fortheir own health care. The debate around implementation of the individualmandate in Massachusetts, on the other hand, has become hung up on the issueof “affordability”—debating at what income levels it can be deemed fair tocompel people to purchase health insurance. Neither are appropriate oradequate frameworks for evaluating the new politics of health reform.

A Twenty-first Century Poll Tax: How Mandates Finance ExpandedHealth Insurance

The first thing to notice is that individual mandates are not unique becausethey force people to buy into the health care system. All countries with universalhealth care require people to buy into the health care system—usually throughtaxes: income taxes, payroll taxes, or from general funds raised from a range oftaxes and tariffs. What is unique about individual mandates is that they areessentially a poll tax. When you require people to buy into a health care systemthrough their income taxes, for example, they pay in a portion of their income—that proportion might be the same for everyone (a flat tax), or it might be largerthe higher your income (a progressive tax), but it is based on one’s income. A polltax, on the other hand, charges the same dollar amount for each person, and so isincredibly regressive.

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By requiring a range of people to purchase a commodity instead of forcingthem to pay a portion of their income into a health care system, we are financinghealth care for that range of people in the most regressive possible way. Pro-gressive income taxes capture a larger percentage of higher incomes; flat taxescapture an equal percentage of low and high incomes; but poll taxes capture ahigh percentage of lower incomes and are basically incapable of taxing anymeaningful portion of higher incomes.

Poll taxes are rare in this day and age. The Constitution of the United Statesactually prohibits Congress from levying poll taxes and states that Congress canonly tax people a portion of their income (this is called the “capitation clause” ofArticle I of the Constitution). The only local poll taxes implemented in recenthistory were the voting poll taxes imposed by a number of Southern states todisenfranchise black voters after the abolition of slavery. Rescinding the poll taxwas perhaps the greatest driving force behind the Civil Rights Movement. A polltax was also imposed by Conservative Prime Minister Margaret Thatcher inGreat Britain during the late 1980s to fund local government as an alternative toproperty taxes based on property value. The law led to a massive, nationalanti-poll tax movement, led by the slogan “Can’t Pay, Won’t Pay,” which cul-minated in the Poll Tax Riots of 1990. Thatcher’s Conservative government wastoppled by the anti-poll tax movement and has not returned to power since. Ifone is willing to go back to the fourteenth century, Richard II of England alsoattempted to finance a war against France with a poll tax—this in turn led to thePeasants Revolts of 1381.

There is a reason, then, that poll taxes are so rare: they attempt to financeexpensive social programs by squeezing resources out of those with the leastdiscretionary income and with the most tenuous financial grip on meeting basicnecessities. Especially as income inequality becomes greater and greater incountries across the world during the twenty-first century, the bulk of society’swealth generated beyond what is needed to meet basic human needs is concen-trated in the hands of the wealthiest: and poll taxes are structurally incapable oftapping the vast income and wealth of the top earners.

This is essentially where the debate over “affordability” fits in for Massa-chusetts today: instead of financing expanded health care through a progressiveor flat tax, such as through Medicaid or any other state subsidy program,Massachusetts has resigned itself to funding expanded coverage through aregressive individual poll tax and is now facing the difficulties inherent in such amodel. As a policy tool, mandates are like trying to shoot a duck in a crowd ofpeople: set the income threshold at which people have to buy insurance too lowand household finances will be destroyed and you will have an anti-poll taxmovement on your hands; set the threshold too high and almost no one will beaffected because uninsurance is overwhelmingly a condition of people with lowand lower-middle incomes.

Skyrocketing health care costs combined with falling real incomes forworking-class and middle-class families in the U.S. mean that with every year,the duck gets smaller and the crowd gets larger. A vanishing chunk of the

241BENJAMIN DAY: FORCE-FEEDING HEALTH INSURANCE

uninsured—and the lower middle-class in general—is able to pay for health careout-of-pocket without serious financial consequences. This is part of a broaderphenomenon: the shrinking ability of even middle-class families to meet theirexpenses with falling real incomes. As a consequence, working-class and middle-class families are no longer able to save, have virtually no discretionary incometo meet emergencies or large new living expenses, and in fact are going intorecord levels of debt.

A study by the Center for American Progress and the SEIU has documentedthe incredible disappearance of middle-class economic security, which has seenastonishing erosion just during the four years of George W. Bush’s first term.Between 2001 and 2004, the percentage of middle-class families with sufficientsavings and income to afford a spell of unemployment dropped from 39.2 to 28.8percent, while the percentage of families that could weather the costs of a minormedical emergency plummeted from 34.8 to 22.3 percent. At the same time,middle-class families have been taking on extraordinary levels of debt—debtaveraging well above the total income taken home annually for the averagefamily (in 2006, average consumer debt was 126.4 percent of disposable income).These record levels of debt reflect the squeeze placed on even middle-incomehouseholds facing rising costs of health care, housing, and other big-ticket items,with stagnating or declining income levels.

As many critics have noted, our fragmented, commercial health care systemis not only poor at covering people (access), but also it has proven singularlyunable to control costs (affordability). Among all countries, the U.S. spends themost per person on health care, while it has among the worst levels of access andsome of the poorest health outcomes of any developed nation. If premiumscontinue to go up at the same rate as the previous ten years, the cost of familyhealth insurance at large employers in the Greater Boston will average $22,400per year by 2011. What sort of a household income would be necessary for afamily to be able to “afford” a premium of $22,400? Would $60,000 per year beenough? Even a family income of $100,000 would see almost a full quarter of itspay sacrificed on the alter of our inefficient commercial health care system.

The Myth of “Shared Responsibility”

Most of the proposals riding on the heels of the Massachusetts health lawsimultaneously propose some level of state subsidies for the very low-income andsome form of “employer responsibility” alongside the individual mandate. Thispackage is put forward as an embodiment of “shared responsibility” amongsocial groups and shareholders.

“Shared responsibility” is just Orwellian new-speak in this context: when itcomes to paying for health care—the most important responsibility—individualmandates are the most regressive, and employer mandates are still relativelyregressive, and only public subsidies have the potential for flat or progressivefinancing (essentially, they are as progressive as the tax system they rely on).


What is meant by proponents of “shared responsibility” is that the state,employers, and individuals would now share the penalties of opting out of theincredibly regressive financing structure that is being created, but withoutsharing the responsibilities of paying an equitable portion of everyone’s incomeand discretionary wealth.

For neoliberal conservatives, the term “shared responsibility” has a uniquemeaning: it is rooted in the belief that many individuals have been let offscot-free from their obligation to pay toward the health system. They portray alarge range of the uninsured as “free riders,” getting free care through publicsupport programs, while they could in fact afford to purchase insurance. In thiscontext, “shared responsibility” means forcing free riders to pay their share.However, what is unusual and concerning is the extent to which social progres-sives and trade unions—who generally do not buy the myth of portraying theuninsured as free riders (discussed at length later)—have adopted the language ofshared responsibility as if it actually represented an ideal of equitability.

John Edwards, the Democratic primary candidate with the most laborsupport for his Presidential bid in 2004, has unveiled a very specific healthreform plan for his 2008 campaign: he is calling it the “Universal Health Carethrough Shared Responsibility” plan. The plan involves an individual mandate,an employer play-or-pay provision, and state subsidies for the low-income—sound familiar? The Edwards plan came short on the heels of, and in many ways,closely resembled The Health Americans Act proposed by Senator Wyden andendorsed by Andy Stern about a month previous: that Act would finance healthcare through state subsidies, Employer Shared Responsibility Payments andIndividual Shared Responsibility Payments (sic).

In Governor Schwarzenegger’s proposed California reform—a deft politicalmaneuver to deflate a growing single-payer movement in the state—we findphrases such as: “Consistent with the principle of shared responsibility, theindividual’s/family’s contribution toward the premium will be as follows . . .”Note how the language of shared responsibility eclipses rational discussion.Charging premiums to individual households is not scrutinized as one way offinancing health care among many, or as potentially prohibitive to the access ofquality care, the act of paying for health care as a commodity is treated almost asa moral obligation that exonerates the individual from charges of irresponsibility.

The myth of shared responsibility is even more insulting when, in practice,employers succeed in undermining any employer contributions upon implemen-tation. Almost a dozen employer mandate or “play-or-pay” laws have beenpassed in different U.S. states—including Massachusetts back in 1988—thathave been repealed or gone unimplemented as a result of intense lobbying byemployer associations. An increase in rates paid to hospitals in Massachusetts’s1988 Dukakis Health Care Security Act was supposed to be funded out of stifffees for employers not covering their workers. Well, the rate increases wereimplemented, but the employer fees were not—leaving the state to foot the bill.Likewise, the most recent Massachusetts reform law imposes significant newhealth care costs for the state, but any effort to impose employer responsibility


has been undermined. During the draft of the bill, the business lobby managedto get an “Employer Fair Share Contribution” reduced to $295 per year perworker for employers not offering health insurance for their employees. This isa paltry sum considering the cost of insuring a single worker for a year, but eventhis meager amount was bulldozed under during the implementation process.After intense lobbying, the state agency responsible for implementing thisportion of the bill decided that any employer either covering 25 percent of itsworkers—with any plan no matter how poor—or any employer offering to cover33 percent of the premium for a group health care plan—again, no matter howpoor the plan—would be off the hook. Not even Wal-Mart, whose “FreedomPlan,” for example, is so bad that the company could easily offer to pay 33percent of its low premium costs, would be fined in such a case despite itsmassively uninsured workforce.

All countries with universal health care distribute the costs of insuranceacross socioeconomic groups: typically through payroll and income taxes. Itwould be strange to call this “shared responsibility” any more than we currentlyhave a shared responsibility for maintaining a quality, well-funded police force,fire fighter response network, or public education. Protection from the law anda quality education are public rights, and we are all responsible for paying ourtaxes. The concept of shared responsibility is based on a financing system inwhich health care is purchased as a commodity, and implies that employers andindividuals will all participate in the act of consuming health insurnace. Thisconcept bears no resemblance to the ideal of equitable financing, which guidesall international comparisons of health care justice, and in a way it shelters anapproach to health reform that makes equitable financing impossible.

Criminalization of the Uninsured

Another feature of individual mandates that sets them apart from most otherproposals to expand health care coverage is that they require incredibly punitiveenforcement mechanisms. This is because individual mandates are so regressive,and paying the full cost of a health care plan—unlike paying a reasonablepercentage of your income—is so unmanageable for most households that onlythe most dire penalties will serve as effective incentives. In Massachusetts, thefine for remaining uninsured is more financially severe than even some of ourmost shocking crimes (see Table 1):

The original House version of the Massachusetts law would have suspendedpeoples’ driver’s licenses as well. Senator Wyden’s proposal for the country as awhole would revoke immigrants’ visas if they do not purchase health insurance,along with a long list of vicious civil penalties for any opting out. Will lawmakersactually have the stomach for imposing massive fines on the uninsured who, afterbeing fined, will still lack any form of health care coverage? Will Massachusettsresidents stand for punishment of the already marginalized?

There are no civic organizations in Massachusetts that championed indi-vidual mandates—it is a policy without a grassroots constituency. There is,


however, a powerful industry coalition behind the concept: the health insuranceindustry has proven to be a strong backer of individual mandates because theycreate a large captive market for insurers; employers have tended to back indi-vidual compulsion as an alternative to employer mandates—forcing employersto cover their workers or face stiff fines—and as a framework that shifts respon-sibility for insurance on to their workers; lastly, hospitals have supported man-dates as a way of reducing “bad debt” and nonpayment by uninsured patients.

The regressive, punitive reality of individual mandates is in stark contrast tothe way that mandates are presented when they are being foisted on a popula-tion. An opinion poll conducted by the Kaiser Family Foundation and HarvardSchool of Public Health queried respondents: “To achieve universal healthcoverage, one proposal would require that everyone have health insurance, theway all drivers are required to have automobile insurance. People with higherincomes who do not have coverage would be required to buy insurance, and thegovernment would help pay for insurance for those who can’t afford it. Wouldyou favor or oppose such a plan?” This sounds progressive—assistance for thosewho “can’t afford it” and self-payment by “people with higher incomes.” Notsurprisingly, 79 percent of Democrats responding favored such a plan, while 53percent of Republicans opposed it. However, subsidies at the very low-end of theincome scale do not make a regressive financing structure progressive. In Mas-sachusetts, households above the threshold for subsidies would still have to dishout 10, 15, or 20 percent of their household income to pay the full cost of aquality health plan out-of-pocket.

The Second Foot Falls: Eroded Insurance Standards

However, quality health care is not what most proponents of individualmandates have in mind. Following closely behind state-level individual mandateproposals are plans to offer “affordable” health insurance. The plans that arebeing offered to uninsured households hit by the individual mandate in Massa-chusetts, such as those that will be on offer in other states, have relativelylower—but still quite expensive—monthly premiums, but much higher costswhen you actually access care. This is accomplished by designing plans with highdeductibles, high co-payments, high coinsurance, or with restricted benefits. A$2,000 deductible would mean that you pay the first $2,000 of health care costs

Table 1. Massachusetts Punitive Index

Crime Fine

Violation of child labor laws $50Illegal sale of firearms, first offense $500 maximumDriving under the influence, first offense $500 minimumDomestic assault $1,000 maximumCruelty to or malicious killing of animals $1,000 maximumCommunication of a terrorist threat $1,000 minimumBeing uninsured in Massachusetts $1,000 minimum


you incur during the year out of your own pocket, at which point your insurancewill finally kick in. Co-payments mean you pay a fee for every time you access aservice or purchase prescription drugs and coinsurance means you actually pay apercentage of the costs of each service or product. Limited benefits mean thatyour insurance will not cover certain items at all and you will bear the full priceof such good and services yourself. These methods of “cost-shifting” enableinsurers to lower their monthly premiums because on average the insurancecompany will pay much less when you actually need care than they would if youwere fully covered.

There is nothing affordable about cost-shifting, and in a way, individualmandates combine with crummy health insurance plans to create the perfectdisaster for the uninsured. While policy makers recognize that uninsured house-holds could not possibly be forced to pay monthly premiums of $400, $500, or$600 per month for a quality plan, they are mistakenly comfortable offering planswith premiums at $200 to $300 a month with extensive cost-shifting (highdeductibles, co-payments, coinsurance, and/or limited benefits). Think about thiscarefully: lawmakers and policy wonks recognize that uninsured families above acertain income level might just be able to afford low premium costs, but no more.How then are these families able to afford the deductible payments if they actuallyneed care? Or high co-payments? Or care not covered by the plan at all?

The only thing worse than being uninsured is paying for care you cannotuse.

Policy Justification for Individual Mandates and the “PersonalResponsibility” Movement

This raises the more fundamental question of what the policy justificationis for individual mandates. The concept has been most clearly articulatedwithin a broader framework of “personal responsibility” reforms that weredeveloped in the 1980s to attack the welfare system; this movement has beenrevived in the twenty-first century to overhaul the health care safety net (justas the relatively successful movement to undermine welfare targeted theincome safety net).

Republican Governor Mitt Romney justified the policy thusly: “40% of theuninsured were earning enough to buy insurance but had chosen not to do so.Why? Because it is expensive, and because they know that if they becomeseriously ill, they will get free or subsidized treatment at the hospital. Why payfor something you can get free? Of course, while it may be free for them,everyone else ends up paying the bill, either in higher insurance premiums ortaxes.” And so the ideology of health care as a personal as opposed to a socialobligation has been paired with the image of relatively well-off individuals “freeriding” on public largesse.

The personal responsibility movement is rooted in the third plank of NewtGingrich’s “Contract with America,” the “Personal Responsibility Act” aimed at


sharply limiting access to welfare benefits. The logic of personal responsibilityattempts to prevent “free riding” by public program recipients and shifts finan-cial burdens onto disadvantaged communities, often relying on punitive enforce-ment mechanisms.

In the context of health reform, personal responsibility has reared its head intwo other important contexts previously. Firstly, the advent of health savingsaccounts (HSAs) and high deductible health plans was premised on a personalresponsibility narrative explaining health care costs. This discourse blamedindividuals for overusing the health care system because insured peoples weresupposedly not “cost sensitive” enough to ration their own use of health care.And so, shifting individuals into high deductible plans with high co-payments sothat they pay a significant chunk of their initial health care usage out-of-pocketwas offered as a solution to the crisis of rising health care costs.

This theory is not taken seriously in academic discourse and is based on anideologically self-serving myth. The truth is that patients have very little say inthe bulk of the health care they receive: they can choose to go to the doctoror they can choose to go to the emergency room, but over 90 percent ofhealth care spending results from the decisions of doctors on behalf of theirpatients. Making individuals “cost sensitive” has been shown to reduce theiruse of both unnecessary and necessary care, but it does not lead to costcontrol. The spread of HSAs and high deductible plans has been driven byemployers looking for low-cost options to provide catastrophic coverage. Theideology rationalizing them as cost control is pure mythology, thinly veiling acost-shifting mechanism.

A second, more recent manifestation of the personal responsibility move-ment has been in the shape of state Medicaid reforms. A number of statesincluding West Virginia and Florida have decided, as a way of reining in theirMedicaid spending, to force Medicaid recipients to sign “responsible behavior”affidavits, agreeing to abide by healthy living standards and to conform tomedical treatment regimes. Doctors have been asked to report on their patientswho fail to live up to their contractual obligation to responsibly manage theirown illnesses and their own health. Medicaid recipients found by their doctorsto be in violation will have a range of benefits stripped from their coverage. Thelaws will apply to children. Rhetoric surrounding these bills has similarly focusedon blaming the victims, asking why the public should pay for medical costsincurred by individuals’ irresponsible behavior.

Just as high-deductible health plans are a thinly veiled attempt to shiftcosts onto patients, likewise personal responsibility Medicaid reforms arebased on the mythologies that individuals’ health is, to a meaningful extent,within their control, that poor decision making by individuals is not often aconsequence of being unwell or a consequence of their environment, and thatthe threat of lost benefits will actually be effective in promoting health. Noneof these mythical suppositions are true and doctors have already begun ques-tioning the ethics of becoming complicit in reporting on their patients undersuch a scheme.


Individual mandates, then, are the third foot of the personal responsibilitymovement falling on the field of health care reform. High-deductible plansrepresent a vision for the private sector, in particular, where costs are spiralingout of control, while personal responsibility contracts represent a vision forreform of the public sector. Individual mandates represent a vision for address-ing the crisis of the uninsured. They are, however, based on an equally mythi-cal premise: that a significant number of the uninsured can reasonably affordthe costs of health insurance and that these uninsured households are a burdenon the public through the use of free care. Neither is true.

All indications show with each year of rapidly rising health care costs,insurance becomes unaffordable for a larger and larger chunk of the middle-class. Healthcare as a commodity in the United States is literally pricing itselfout of the market. It is simply not true that middle-income families are able toaccess free care through hospitals—as Governor Romney claimed. In Massa-chusetts, for example, which has a fairly liberal free care pool policy, onlyindividuals up to 200 percent of the poverty line will be covered by the state ifthey are forced to use an emergency room. From 200 to 400 percent of povertyline, individuals are eligible for partial free care but must pay between 20 and 80percent of the hospital costs on their own. In 2005, only 5 percent of charges tothe free care pool came from those above 200 percent of the poverty line—a verysmall sum that does not represent a burden to the public. What happens then forthose above 400 percent of poverty who go to the hospital? The same thing thathappens everywhere else in the country: individuals receive a bill in the mail forhospital services—a bill that will charge them more for the same services thaninsurance companies pay. If they are unable to pay the bill, their account will besent to a collections agent and either they will continue refusing to pay, bewritten off as bad debt and have their credit ruined, or they can declare bank-ruptcy. Over half of bankruptcies in the United States are filed primarily becauseof medical costs.

The image that has been constructed of a free hospital safety net is a mythand disguises the ugly truth of what it costs the uninsured to receive care whenthey absolutely cannot go without it. The notion that the public is sufferingunder the burden of uninsured “free riders,” for whom they pick up the tab, isalso a myth—designed to mobilize the insured into the political project ofdismantling our health care safety net.

There is then no compelling policy justification for individual mandates.Furthermore, mandates represent a dangerous alternative to expanding healthcoverage through public programs. They are regressive and antiworker. Lastly,they undermine the moral and commonsense underpinnings of the social insur-ance concept: that none of us is “personally responsible” for our health, but thatwe must be socially responsible for one another’s health or everyone of us will befailed by society when we are most in need.

Benjamin Day is Executive Director of Mass-Care: The Massachusetts Cam-paign for Single Payer Health Care. He is completing his doctorate at Cornell


University’s School of Industrial and Labor Relations. Day’s research on laborand work has appeared in peer-review journals and books. Address correspon-dence to Benjamin Day, Mass-Care, 33 Harrison Avserve, 5th Floor, Boston,MA 02111. Telephone: (617) 723-7001: Fax: (617) 723-7002. E-mail: [email protected].


force-feeding health insurance: labor and the push for individual mandates

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