State individual mandates would boost coverage, curb premiums

Les Masterson

July 23, 2018

Dive Brief:

• If all states created individual mandates that required residents to have health insurance, there would be nearly 4 million fewer uninsured people next year and 7.5 million in 2022, according to a new Commonwealth Fund study.
• State-created individual mandates would also decrease premiums on Affordable Care Act plans by 11.8% in 2019.
• Uncompensated care for hospitals would drop by $11.4 billion and states would gain $7.4 billion from state mandate penalties, according to the report.

Dive Insight:

Congress nixed the ACA’s individual mandate penalty as part of the tax package at the end of last year. Connecticut, Vermont, Hawaii, Washington and Maryland have all discussed instituting mandates this year, but despite those efforts, only New Jersey has joined Massachusetts in implementing one.

ACA advocates say the individual mandate is critical to maintain a balanced risk pool. Without it, healthier members will drop coverage and leave the sickest in the ACA plans, which will increase premiums, they argue.

In its report, The Commonwealth Fund used the Urban Institute’s health insurance policy simulation model to estimate coverage and cost impacts of having state mandates. The estimate assumed that each state would create a similar individual mandate.

If all states created an individual mandate, the impact would vary by state, according to the report. For example, Colorado would see 19% fewer uninsured people in 2019, while California would have 10% fewer uninsured people. The average premiums would also differ. Alaska would see a 4% average drop in premium costs, while Washington would have a 15% decrease.

If all states implemented a mandate, employer-sponsored health insurance, nongroup and Medicaid/Children’s Health Insurance Program plans would all see increased membership.

Nongroup plans without tax credits would see the biggest increase in members, gaining more than 2.7 million enrollees in 2022.

That infusion of new members, who will likely be healthier, would stabilize the overall nongroup market and bring down premiums. However, those people would also not benefit from tax credits. So, they would pay more for coverage than people with lower incomes.

Despite the report’s favorable view of the mandate, The Commonwealth Fund acknowledged that there are speed bumps. For instance, eight states don’t collect income taxes, so an individual mandate that penalizes people at tax time wouldn't work. Also, many state leaders oppose the ACA and surely won’t want to bring back the individual mandate, which was one of the more unpopular pieces of the health law.

“Even states that have governors and state legislators who are generally supportive of the ACA are likely to find it politically challenging to impose mandate penalties,” the fund said.

The Republican-led Congress whacked a vital part of the ACA when it eliminated the penalty starting in 2019. A recent joint report from the Center for Health Policy at the Brookings Institution and the USC Schaeffer Center for Health Policy & Economics said the number of uninsured Americans will rise, but didn't estimate a specific number. The report did say that about 8 million people would have been uninsured without the mandate in 2016.

The Congressional Budget Office projected 13 million people will lose or drop insurance over the next decade without being required to have coverage. Also, ACA plan premiums will increase by 10% annually in most years because of people dropping coverage, CBO said.

https://www.healthcaredive.com/news/state-individual-mandates-would-boost-coverage-curb-premiums/528304/