Yesterday I wrote about Plan B for the individual mandate which could be threatened by court decisions or a future congress. Health care reform ensures that insurance companies must take people with preexisting conditions. The obvious problem is that someone could skip having insurance until they know big medical bills are coming soon and then apply for insurance and companies would be powerless to refuse and so be stuck with pick payouts for relatively little in premiums. The solution in the Affordable Care Act (aka ObamaCare) is the individual mandate .

A few days ago there was a court decision that ruled the individual mandate unconstitutional (see Bloomberg News story). There will be more litigation and the issue may end up in the Supreme Court.

Striking down the individual mandate by the courts or perhaps a repeal of this provision would be bad news for heath care reform but it is good to see that someone is thinking about a Plan B (see Kaiser Health News story)just in case the individual mandate is out of the picture.

The most straight forward idea would just be to raise taxes enough to cover insurance cost for the whole country and then offer a tax rebate to each filer that would cover a reasonable insurance plan and have some sort of mechanism for insuring those who cannot afford to pay full price for a reasonable plan. This approach would probably be a hard sell in an age of “no new taxes”.

But other options are surely possible. I like the one suggest by Paul Starr of Princeton in the article cited above (Kaiser Health News). Perhaps this or some variant of the idea might be useful.

Princeton sociologist Paul Starr, who was a senior health adviser to President Bill Clinton, anticipated the risk of political backlash even before health law was passed. He outlined a more flexible alternative aimed at quelling political fires while still expanding the insurance pool.

Except for the poor (people making less than $9,350 and couples earning less than $18,700 are not subject to the mandate but would be eligible for coverage under Medicaid), people would have three choices, Starr said. They could buy insurance, with subsidies if they qualify. They could pay an annual tax penalty for going uninsured. Or they could opt out with no penalty – but they couldn’t opt back in for five years.

Those who opt out wouldn’t be eligible for any subsidies in the exchanges. And under this scenario, they wouldn’t be covered by one of the most popular protections in the legislation — the ban on insurers excluding people with pre-existing conditions. People who opted out could still shop for insurance, but there would be no guarantee that they could find an insurer to cover them, at a price they could afford.

Then there could be waiting periods or penalties for waiting (as in Medicare Part B). At any rate, if enough people think this is an important issue, I’m sure we can find a reasonable solution.

Note added: You might want to check out FireDogLake which lists 8 alternatives to the individual mandate.