RELEASE: Unnecessary Delay of Individual Mandate Will Harm Millions, Make Premiums More Costly
Washington D.C. — According to a new issue brief released today by the Center for American Progress, any delay in the individual mandate to purchase health coverage under the Affordable Care Act would undermine the success of state-based exchanges and harm millions of Americans, resulting in significantly more uninsured individuals and more costly premiums for consumers in plans both in and out of exchanges. Instead of calling for a delay of the individual mandate, lawmakers should instead focus their efforts on public outreach and education to ensure that the market reforms heralded by the Affordable Care Act work to benefit us all.
Despite lower-than-expected premiums for plans in insurance exchanges, major technological issues with HealthCare.gov are frustrating consumers who are trying to compare and enroll in health plans. As a result, some members of Congress have called for a one-year delay of the individual mandate to purchase health coverage under the Affordable Care Act, or ACA.
While issues with the website for federally facilitated marketplaces have made it difficult for consumers to enroll for coverage, states that are running their own exchanges are successfully enrolling thousands of consumers in affordable health plans. Recent estimates from the 15 state-based exchanges indicate that more than 365,000 people applied for coverage in the first month of enrollment. States such as Kentucky, New York, and Washington have already enrolled thousands of consumers in private health plans, with thousands more signing up for other coverage, including Medicaid. Given this success, a delay of the mandate is overbroad and unnecessary.
As detailed in the CAP issue brief, a one-year delay of the mandate would have significant consequences for millions of Americans, leaving millions more uninsured and substantially raising premium prices for those with insurance.
- Higher numbers of uninsured. The nonpartisan Congressional Budget Office, or CBO, estimates that a one-year delay of the mandate would decrease the number of Americans expected to gain insurance coverage in 2014 under the Affordable Care Act by approximately 85 percent. CBO’s earlier projection that 13 million Americans would gain coverage in 2014 with the mandate in place would be reduced to just 2 million people, leaving 11 million fewer people without coverage. In total,55 million Americans would be uninsured in 2014.
- Higher premiums for the insured. Average premium rates for exchange plan coverage in 2014 are substantially lower than projected—on average, more than $700 less than earlier estimates. Insurers set these rates based on current law, which included assumptions that the individual mandate would increase enrollment and spread risk. Delaying the mandate would force insurers to offset the impact of the delay in 2014 by sharply increasing premium prices for 2015. Higher prices would not only affect plans sold to individuals through exchanges, but they would also affect the cost of individual plans purchased outside of an exchange. More-expensive rates would cause some healthier people to forgo insurance, potentially leading to additional increases in health plan prices and low enrollment in plans. This cycle of adverse selection would not just impact prices in 2015; it could also make it difficult for plans to establish stable insurance risk pools in future years.
CBO assessed that a one-year delay in the mandate would lead to higher premiums in the nongroup market. Although CBO did not specify the size of the expected premium increase, CBO’s earlier estimates of a permanent mandate repeal showed that average premium prices would increase between 15 percent and 20 percent. Other estimates of permanently repealing the mandate confirm a projected price hike. The Urban Institute estimated that average premiums would increase by about 10 percent with high exchange participation and 25 percent with low participation, and health economist Jonathan Gruber estimated that premiums could be as much as 27 percent higher.
To speak with an expert at the Center for American Progress, contact Katie Peters at firstname.lastname@example.org or 202.741.6285.
Related resource: The Affordable Care Act’s Lower-Than-Projected Premiums Will Save $190 Billion by Topher Spiro and Jonathan Gruber