What if the Individual Mandate is Found Unconstitutional?

The Congressional Budget Office has estimated that eliminating the coverage mandate would increase premiums by 15–20 percent and would cause sixteen million people who otherwise would have been covered under the law not to be covered.4 Jonathan Gruber estimates that eliminating the mandate would add 27 percent to premiums and cause twenty-four million Americans not to be covered.5

We estimate that if the mandate were lifted, premiums in the individual market would increase by 12.6 percent—somewhat less than other estimates—with 7.8 million people losing coverage … In sum, the Affordable Care Act would still cover 23 million people who would have been uninsured without the law. Our study suggests that although the mandate would have important effects on premiums and coverage, it might not be essential to the act’s successful implementation.

Health Affairs study.

10 thoughts on “What if the Individual Mandate is Found Unconstitutional?”

  1. Most of the analysis I’ve heard suggests that Obamacare will fall apart without the mandate.

  2. I had the same initial concern as Brian Williams. Absent the individual mandate, it seems obvious that healthy individuals would opt, causing premiums to rise.

    The idea in the other direction is expressed by Jennifer Haberkorn in Politico: “If the least popular part of the law goes away … what’s left could become stronger and more popular with the public.” (Retrieved from http://www.politico.com/news/stories/1111/67393.html)

    Which raises the question the obvious question; “Which parts of the law would remain and how could it possibly be popular?” The article ventures a guess: “the most popular provisions, based on his polling, are free preventive care and cancer screenings, maternity care and clauses preventing discrimination against women.”

  3. I concur with the other two Brians. Some part of the law will probably survive, and the law’s original proponents will claim victory regardless and for political reasons.

    I also predict that if the law is found unconstitutional, Mitt Romney will do a dance.

  4. It would be interesting to see the other side of the story. On one hand, the concerns expressed in this post seem founded but I get the feeling that there is no actual evidence that the ACA won’t be successful.

  5. I agree with the Brian’s about the rest of it falling apart — I’m just curious how that breakdown will occur, and I’m particularly interested to see how something like IPAB fares in this debacle.

  6. Without an individual mandate wouldn’t things just devolve to the New Jersy case? Guaranteed issue, community rating, minimum loss ratio controls, and premium spread controls mean that premium has to be jacked up to cover the fact that people who wait until they are sick to purchase insurance can no longer be excluded or charged more than their fellows. “Insurance” becomes a sickness pool that makes sense only for those with extremely expensive illnesses.

    Plus costs will still be much higher due to all of the regulatory nonsense and slush funds in the law.

  7. Unfortunately this problem is pretty simple to solve. The problem is that the ACA supporters don’t like the solution. The principal problem is how do we pay for the uninsured who have expensive health care costs. The individual insurance market segment is important to the ACA supporters since it via this segment a significant number of the uninsured would re-enter the insurance market. The problem with the ACA idea was to push a disproportionate share of society’s burden for their care into one of the smallest and arguably the most price sensitive health insurance sector. A recent Milliman report for Ohio estimated the impact of ACA changes to the individual insurance premiums would “increase by 55% to 85% above current market average rates (excluding the impact of medical inflation).” They estimate about half of the increase is attributable to the addition of high health cost individuals to the individual insurance market. The rest of the increase would come from cost shifting and adding required benefits such as maternity benefits that some individuals don’t need. It is obvious that the ACA solution to paying for the individuals with high health costs is a simple wealth redistribution scheme which some people believe was doomed to failure regardless of the constitutionality of the individual mandate. The pragmatic healthy individuals and small businesses are already making plans to minimize this impact. This situation is fraught with unintended consequences. If the individual insurance market does not look like it will survive with the Individual Mandate, there is no chance it will survive without it. A similar but less dire prediction can be made for the small business market. If the preferred method of providing health care to the presently uninsured is to be the individual insurance market, the solution is to spread the cost of individuals with a high health costs over a larger group of people. In practice this means that we would have to enact a uninsured health care fee over all of the health care segments. This would be like the uninsured motorist coverage on our automobile insurance policies but with much higher costs. Since there is no moral high ground when you are redistributing wealth among the same income groups, this health care fee is probably politically unacceptable.

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