Another View on the Importance of the Individual Mandate

The [Lewin] study concludes that the mandate may not be essential because other ACA features encourage insurance purchase and guard against adverse selection — principally, subsidies and a limited open enrollment period. Thus it projects that dropping the mandate would reduce coverage by only 8 million people, about half the 16 million loss projected by the Congressional Budget Office, and a third the 24 million loss projected by MIT economics professor Jon Gruber. Not cited by Sheils and Haught, but also contradicting their findings, are studies by the RAND Corp. and the Urban Institute, which, using similar methods, projected coverage losses from dropping the mandate of 13 million and 18 million, respectively.

The likelihood of crippling market effects is also suggested by experiences in every state that has attempted to implement guaranteed issue and community rating in the individual market without a purchase mandate… The leading New Jersey study concluded that its individual market “appears to be heading for collapse . . . [due to] an enrollment crisis that threatens its market stability…consistent with a marketwide adverse-selection death spiral spurred by open enrollment and pure community rating.” A recent New York study documented that its market for individual health insurance “has nearly disappeared, declining by 96 percent since 1994.” The insurance industry’s Supreme Court brief documents several other well-known examples.

See full Mark Hall post at Health Affairs. Also, see our previous post.

Comments (4)

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  1. Buster says:

    They believe subsidies are enough to encourage enrollment? Possibly so. But Medicaid is free and nearly one-third of the uninsured are eligible but haven’t bothered to sign up.

  2. Gary says:

    I’m not convinced the mandate is all that important.

  3. Brian says:

    I wonder if that other third signed up what kind of a disaster that would create, funding-wise

  4. Aaron says:

    If the nation wide individual insurance market is disappearing, does that mena ehealthinsurance and the like will disappear? As well, I thought both parties wanted to increase individual enrollment over employer-sponsored enrollment.