The Minimum Coverage Mandate Is Essential

Removing the minimum coverage mandate from the Affordable Care act would be devastating for millions of Americans.

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Judges may disagree, but there’s a consensus among legal and economic scholars that this requirement to purchase health insurance is essential to making health insurance available and affordable to everyone, without regard to health status or “pre-existing conditions.” Without this provision, the law is unworkable and the consumer protections it provides become unenforceable.

Today, limited affordable coverage in the small business and individual markets reflects the fact that purchasing health insurance is totally voluntary. Given that health insurance is expensive relative to family or small business incomes, people are reluctant to purchase protection unless and until they need health care. If people who need health care come to dominate an insurer’s policyholders, then insurance can no longer spread or “pool” risk—collect premium dollars from a broadly healthy group of purchasers to distribute to the minority among them who need costly care. For this reason, health insurers do everything they can to screen out or deny protection to people with care needs. The Affordable Care Act ended those practices.

Opponents of the Affordable Care Act claim we can change this behavior without a requirement that people buy health insurance, and simply prohibit insurers from denying health insurance based on pre-existing conditions. But states have tried and failed in this approach.

The lesson—incorporated in the Affordable Care Act—is that effective insurance markets require not only requirements on insurers, but requirements that people buy insurance along with subsidies to make insurance affordable. All three legs of this three-legged stool are critical to effective health insurance.

Eliminating the minimum coverage provision would increase the average individual premium by 27 percent in 2019 and reduce the expansion of insurance coverage by three-quarters, from 60 percent to 12 percent of the 55 million people uninsured in 2019.

Removing the mandate would at the same time dramatically alter the “bang for the buck” in federal spending. While removing the mandate cuts the legislation’s coverage gains by more than 75 percent, it would reduce the spending by less than a quarter—as subsidies are increased to cover the higher premiums for the more modest number of the sicker uninsured who are most likely to participate.

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