The Individual Mandate: One Leg of the ACA’s “Three-Legged” Stool

The individual mandate has been a magnet for contentious debate since the ACA became law in 2010. The ACA was not the first time a mandate to purchase insurance has been floated in the U.S.–the Clinton Administration supported the concept in the Health Security Act of 1993, which did not become law. Prior to the ACA, Massachusetts became the first state to require all individuals over 18 to have health insurance and helped enacted measures to help facilitate the expansion in coverage. And, as art imitates (or predicts) life, the West Wing featured the health care debate even before Senator Obama became candidate-Obama. [You can watch it on Netflix. Season 7, Episode 7, “The Debate.” The health care portion starts at 16:43].

Before we get into the details of what the mandate requires (and an update on its current status), let’s take a quick look at the arguments on either side of the issue.Supporters of the mandate have two primary justifications: (1) it will help the U.S.’s private-public hybrid insurance system work most effectively by spreading the cost out among as large a risk pool as possible; and (2) a moral imperative that healthcare is a right, and not a privilege afforded to those with means. On the other side of the issue, opponents of the mandate argue that it is a government infringement on personal freedom.

After surviving a constitutional challenge, the individual mandate was enforced as a tax penalty (the means of collecting the fine from those without insurance). Depending on circumstance, the ACA allows individuals to obtain coverage through a variety of means, including employers, government health programs (i.e. Medicaid, Medicare, Tricare), or the health insurance exchange. Subsidies are available to those who lack enough financial means to purchase coverage on the exchange.

However, conservatives have been hard at work trying to repeal the ACA since it became law in 2010. Until this past year, they had limited success aside from a very significant ruling by the U.S. Supreme Court in 2011 that allowed states to opt-in to, rather than require participation in, Medicaid expansion. [Medicaid expansion was meant to be the most significant way of expanding coverage by helping millions of previously uninsured individuals satisfy the requirements of the individual mandate.]

At the end of 2017, the Republican-controlled Congress passed a tax bill that eliminates the fine for not purchasing health insurance beginning in 2019. [We don’t say this to be partisan, merely to illustrate that it passed with zero affirmative votes from Democrats in the House or Senate]. While the language of the bill does not repeal the legislative language or regulatory actions that implement the individual mandate, the elimination of the fine effectually repeals the mandate. There has been significant confusion about how the tax bill affects the individual mandate. A Kaiser Family Foundation poll reported that while 36 percent of the public are aware Congress passed a law repealing the individual mandate, nearly half (46 percent) responded, incorrectly, that the mandate has not been repealed.

Source: Kaiser Family Foundation

While there are sure to many unknown impacts of the individual mandate repeal, a known consequence will surely be an increase in the number of uninsured individuals. The ACA led to historic gains in insurance coverage due to the the Medicaid expansion and provision of subsidies for Marketplace plans. The number of uninsured nonelderly Americans (non-Medicare beneficiaries) has decreased from 44 million in 2013 (prior to the implementation of the individual mandate) to 28 million in 2016. The Congressional Budget Office estimates that the individual mandate repeal will result an increase of 4 million individuals in the uninsured nonelderly population in 2019 and 13 million more by 2027.

So, what’s next? There are some proposals floating around Congress to help uninsured individuals purchase coverage, but there is little confidence they will receive a vote. Stay tuned as we continue to follow the impact of the tax bill and the current political environment on health care.