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Eliminating the Individual Mandate
Effects on Premiums, Coverage, and Uncompensated Care
Under the Patient Protection and Affordable Care Act (ACA) passed by Congress, most Americans will be required to be covered by health insurance or pay a penalty—the so-called individual mandate. The legality of this feature is being debated in the courts.
These Urban Institute authors estimate the effects of the ACA and the individual mandate, as well as various levels of exchange participation, using a model that simulates decisions of individuals and businesses in response to policy changes. Exchange enrollment is viewed as necessary to reduce adverse selection, or the likelihood of only the sickest choosing to be insured.
The researchers found that without the individual mandate:
- Between 40 and 42 million would remain uninsured as opposed to 26 million with the mandate;
- Private coverage would fall 11 million, covering 4 million fewer people than it would have without reform;
- Uncompensated care spending would be much higher due to the increased number of uninsured; and
- Individual premiums in the health benefit exchanges would increase by 10 percent in a scenario assuming high exchange participation and by 25 percent with a low participation scenario.
Removing the mandate from the ACA while expanding Medicaid eligibility would decrease the number of people with private coverage by 3.6 million. Uncompensated care would increase by $20 billion.
Urban Institute Real Time Policy Analysis
Co-branded "quick strike" series of issue briefs on health care coverage and quality issues in the United States.
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