Sarah Kliff in the New York Times interviewed several health economists about the lack of a problem from a lack of a federal individual mandate:
Many experts now view the individual mandate as a policy that did little to increase health coverage — but did a lot to invite political backlash and legal challenges….
Obamacare’s insurance subsidies, via tax credits, brought more stability to the marketplace than originally expected. The credits are structured to keep premiums affordable for low and middle-income Americans even when the base price of insurance rises.
The theory behind the individual mandate in terms of enhancing Exchange enrollment was simple:
- Reduce the gap in the cost of being uninsured versus being insured
Let’s work within this framework. There are two ways to reduce the gap. The first is to raise the cost of being uninsured. The second is to lower the cost of being insured.
The price linked subsidy system that the ACA uses has an odd (and for me, a career defining) feature: more expensive premium levels aren’t necessarily a bad thing. Hell, they are a good thing for subsidized enrollees. This is especially true when the expensive premiums are for silver plans that set the subsidy benchmark.
The individual mandate penalty was set to zero in December 2017 for the 2019 policy year. At the same time, insurers had silver-loaded their premiums, to use a technical term, up the wazoo for the 2018 plan year.
Plans became way cheaper for people who received premium subsidies and did not buy silver plans. Subsidized individuals who bought silver plans saw no fundamental change in relative prices. Zero premium plans proliferated.
In this environment, it is not too surprising that the individual mandate’s existence, especially a fairly weak mandate, does not matter much. The price gap between being insured and being uninsured had shrunk; the shrinkage just came from the other direction.
Now what I would love to see would be a difference in difference approach between states that all consistently silver loaded but had variation on whether or not states adopted a state based individual mandate. I think that approach would give stronger evidence on the actual impact of the individual mandate as silver loading is a massive confounding factor in simplistic enrollment analysis.