Mandate, exemptions and the taste for compliance

Matt Fiedler at Brookings had an excellent thread on the impact of the individual mandate on coverage.

In assessing the individual mandate’s effect on coverage, recent sharp decline in uninsured rate above 400% of the FPL is an important data point. /1 pic.twitter.com/pJbxMT0fIX

— Matt Fiedler (@MattAFiedler) November 27, 2017

Noam Levy in the LA Times had a good story on the implications of a mandate repeal in single insurer, high cost counties:

There are 454 counties nationwide with only one health insurer on the marketplace in 2018 and where the cheapest plan available to a 40-year-old consumer costs at least $500 a month. Markets in these places risk collapsing if Congress scraps the individual insurance mandate.

One of the key things to note from this Levy piece is that a significant chunk of the non-subsidized population is not liable for the individual mandate penalty. The IRS offers an an automatic exemption if the least expensive Bronze plan is more than 8.05% of income. In these counties, this is a threshold income for a single forty year old individual of at least $74,500 or 620% Federal Poverty Line (FPL). A married couple of the same age has a six figure income exemption. The mandate very lightly touches people in thees regions already.

This is an excellent test for the taste for compliance.  How many people who make between 400% FPL and the county level mandate exemption and who do not have significant medical issues buy insurance?  If taste for compliance drives purchasing decisions we would expect to see this group to look a lot like the group of people who make just over the hardship exemption in their buying decisions.  If the mandate is primarily a financial factor, we should see a discontinuity between these two groups.

I don’t have the data nor the statistical chops to do this analysis, but there is enough variation for an interesting analysis where either result or more likely a mixed result would be policy relevant.