Insurance mandate lacks teeth, WellPoint CFO says

As constitutional challenges to the health reform law’s mandate to buy insurance advance, WellPoint Inc.’s chief financial officer reiterated that the company does not object to the mandate, just to its modest penalties.

Wayne DeVeydt, speaking Friday at the Columbia Club downtown, praised the Patient Protection and Affordable Care Act of 2010 for its success at extending insurance coverage to more people, as well as acknowledging that his industry makes itself “an easy villain” for politicians.

But he also criticized the law for further hiking the cost of health care and health insurance.

The chief target of DeVeydt’s opprobrium was the law’s combination of requiring insurance companies to take all comers—regardless of health status—while fining individuals what he described as small amounts for failing to buy coverage.

“I would like to buy life insurance the moment I’m about to die,” said DeVeydt, who has been CFO for Indianapolis-based WellPoint since 2007.

That’s what he expects many Americans to do with health insurance once they are required to buy coverage in 2014. They will not buy it until they have a major illness for which they need treatment.

By 2016, the health reform law will ramp up fines on individuals without health insurance to $695 per year or $2,085 for families. However, the fines could run as high as $12,000 per year for those making between $100,000 and $500,000 per year, according to an analysis by the Congressional Research Service.

The average family policy costs $15,000, according to the California-based Kaiser Family Foundation.

Until fines get a lot closer to the price of health insurance, DeVeydt said, many people won’t buy coverage—especially the young and healthy, whose unused premiums offset the high cost of care for older patients.

“Would you ever feed the meter if feeding the meter costs more than the [parking] ticket?” DeVeydt said in another analogy. “People say that’s not going happen. It is going to happen.”

Still, DeVeydt said the individual mandate is necessary to achieve a goal of universal health insurance. Currently, about 84 percent of Americans are covered by some form of health insurance, either public or private.

“If you really want to cover everybody, you really have to have it,” he said.

In September, a federal appeals court in Atlanta ruled that the mandate was unconstitutional, differing from an earlier decision by an appeals court in Cincinnati that upheld the law.

The cases are likely to be considered by the U.S. Supreme Court, perhaps as early as next spring.