By Dietrich Knauth
A Congressional Budget Office (CBO) panel recently discussed the difficulty in determining the precise impact of the Affordable Care Act’s individual mandate, noting that other factors such as federal subsidies, the relative convenience of purchasing insurance through new healthcare marketplaces, and increased awareness of healthcare options have also contributed to higher levels of insurance coverage since the law was passed (CBO Report, September 15, 2017).
At a September 15, 2017, meeting of CBO’s Panel of Health Advisers, Alexandra Minicozzi, Unit Chief of CBO’s Health Insurance Modeling Unit, presented recent research for discussion, including a December 2016 CBO report and a study on the topic published in the Journal of Health Economics in May 2017. The CBO health panel discussed recent research on the short-term and long-term effects of repealing the individual mandate.
The Journal of Health Economics study found that, of the increase in insurance coverage since the passage of the ACA, 24 percent is attributable to subsidies for nongroup insurance, 17 percent represents an increase in Medicaid enrollment among previously eligible recipients, 13 percent is attributable to newly eligible Medicaid recipients, and 6 percent is attributable to early expansion of Medicaid eligibility. The other 40 percent is unexplained by the study's model, and includes factors like increased outreach and marketing, easier shopping and enrollment in new health marketplaces, changing social norms around Medicaid and health insurance, and people’s tendency to comply with laws regardless of penalties for noncompliance.
Some of those factors are directly related to the individual mandate, including an aversion to paying tax penalties and social norms that expect everyone to have some form of health insurance, and some are weakly related, such as reduced stigma associated with Medicaid and greater awareness about eligibility for subsidies, according to CBO.
CBO estimated in December 2016 that 15 million people would become uninsured if the individual mandate was repealed, with 2 percent of that loss coming from employer-provided coverage, 6 percent from nongroup coverage and 7 percent from Medicaid and CHIP coverage. But the recent presentation emphasized the challenges of using historical data to project effects of new policies. Repealing the mandate is not the same as never having had a mandate, CBO said, since consumers’ behavior may be changed by reduced stigma associated with Medicaid coverage and increased knowledge about the benefits of having health insurance, subsidies, and the enrollment process. Increased enrollment may persist even if the individual mandate and its penalties are eliminated, CBO noted.
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