Losing ACA mandate penalty will reverse coverage gains, report finds
The end of the Affordable Care Act’s individual mandate could result in millions dropping or losing health insurance in the coming years, according to a new joint report from the Center for Health Policy at the Brookings Institution and the USC Schaeffer Center for Health Policy & Economics.
In a review of data related to individuals earning above 400% of the federal poverty level, author Matthew Fiedler said the uninsured rate dropped in the years after the ACA. That was despite this group facing higher premiums after 2013 and not having the subsidy relief given to some below that income level.
That population's drop in uninsured can't be mostly attributed to other reasons for gaining coverage like the employer mandate or the existence of the ACA exchanges, according to the paper.
The findings are key because the individual mandate penalty will soon be eliminated. As part of its tax package at the end of last year, Congress voted to zero out the penalty starting in 2019.
Fiedler said figuring out the individual mandate’s effect on insured rates is difficult. The mandate started at the same time as other ACA policies, so determining how each provision influenced the coverage gains is challenging, he said.
As a way to overcome that issue, Fiedler focused on people with family incomes above 400% of the federal poverty level. They would not be eligible for ACA subsidies that help contain premium and out-of-pocket costs, eliminating the subsidies as a reason for gaining coverage.
Killing the penalty will result in “a meaningful increase in the number of uninsured.” The exact number will take time to come to fruition, but about 8 million people would have been uninsured without the mandate in 2016. “The coming reduction in insurance coverage due to repeal of the individual mandate will likely prove hard to reverse,” Fiedler said.
To not let insured numbers revert back to the days before the mandate, state and federal policymakers will need to restore the penalty or put in place a similar program, he said.
Massachusetts has had an individual mandate for more than a decade, and New Jersey became the second state to implement one just last week. Other states are interested in an individual mandate, but so far haven’t approved their own measures yet.
The individual mandate was one of the more unpopular parts of the ACA. Critics including the Trump administration and congressional Republicans say it forces people into more expensive health plans than they want. Removing the mandate penalty and opening up options like short-term catastrophic plans and association health plans will create more affordable plans for healthy people, they say. Those plans, however, usually offer less coverage and have high deductibles and copays.
Individual mandate supporters, including payers, say the penalty helps nudge people to get covered. The mandate was especially vital in bringing in young, healthy people, who might not have otherwise gotten health insurance. Having healthier people in the risk pool helps offset the sickest members, which keeps premiums lower than if healthier people weren't insured.
- Brookings Institution How Did the ACA’s Individual Mandate Affect Insurance Coverage?
- Brookings Institution Coverage gains among higher-income people suggest the ACA’s individual mandate had big effects on coverage