Elements of health care reform often include specific language. This guide includes definitions for some of the most commonly used terms.

Individual Mandate: An individual mandate is a requirement that all individuals purchase health insurance coverage. Two issues created by an individual mandate are the need for an effective enforcement mechanism, such as a penalty for non-compliance, and agreement on a politically acceptable and affordable minimum coverage requirement, such as minimum benefit package, to meet the mandate. The usual enforcement mechanism is a state income tax penalty, but these penalties are less than the cost of buying coverage. Another enforcement mechanism that has been discussed, but not enacted, is a monetary penalty, which would be set at a level higher than the average cost of health care coverage.

Employer Mandate: An employer mandate is the requirement that employers provide health care coverage to their employees or pay a penalty. The penalty typically means an employer pays a percentage of payroll (e.g., 3 percent) or a flat fee per employee (e.g., $295 per employee). Many ERISA experts believe that there is no way to mandate that employers provide coverage without pre-empting the ERISA law.

Public Program Expansion: States are looking to expand the eligibility for existing public programs, such as Medicaid and State Children's Health Insurance Programs (SCHIP). In addition, states are working to further augment or create programs to provide premium subsidies for people not eligible for public programs to buy employer sponsored coverage.

Connector/Purchasing Pool: A "connector" typically takes the form of a purchasing pool run by the state to allow individuals to purchase coverage, which, in theory, would make it more affordable. Some states would require everyone to purchase through the connector, while others would offer it as an alternative to the commercial market.

Transparency/Health IT: The government and insurers are working to encourage greater transparency so consumers can better see the cost and quality of their health care, as well as the increased adoption of health Information Technology, such as electronic medical records.

Wellness: Encouraging wellness, increased adoption of disease management and incentives for healthier living are very much a part of the health care reform discussions.

Market Reform Terms

• Guarantee Issue: Another element of reform being considered both with and without an individual mandate is a requirement that carriers provide coverage regardless of medical status. The guarantee issue requirement is typically tied to certain benefit packages that are part of the reform.
• Community Rating: An additional proposal is a community rating requirement with adjustments for age and geography. Some states would also permit adjustments for gender and family composition. The concept behind community rating is to spread the risk across the population so that the healthy subsidize the sick.
• Merger of the Small Group and Individual Markets: The theory behind merger of the small group and individual markets is that by making the pool of people larger, the cost for coverage for individuals will go down.
• Mandated Medical Loss Ratio: Regulation of carrier administrative costs by mandating a certain medical loss ratio is an idea with increasing political appeal. Mandating a certain medical loss ratio would eliminate the incentive for companies to control medical costs and to improve efficiencies.

High Risk Pools: The majority of states have some form of a high risk pool to provide coverage to the medically uninsurable. Many states are trying to reform their pools by bringing the products offered through them in line with current market products, which include such features as disease management programs. In addition, states are seeking to limit the number of people in the high risk pool by reducing the categories of disease states that qualify. Under some access proposals, the high risk pool would be eliminated because of a guarantee issue requirement and/or replaced with another pooling mechanism. Some states that currently do not have high risk pools are looking to establish one. A well structured high risk pool can be an effective vehicle to provide coverage for people with complicated medical conditions.