Requiem for the Individual Mandate, a pillar of the ACA.
The individual mandate, an idea inspired by conservative intellectuals but ultimately embraced by Democratic lawmakers as an essential part of the Affordable Care Act, will soon be dead. The provision would be eliminated under the tax bill passed Wednesday.
Left behind would be a policy structure that relied on the mandate to push the young and healthy to buy health insurance and thus strengthen the marketplace for millions of Americans. The Affordable Care Act, which adopted the mandate as a central provision, will remain the law, and President Donald Trump far overstated matters when he said that “we have essentially repealed Obamacare.” But the loss of the mandate — the bestknown and least-liked part of the health care law — will cause substantial changes.
The magnitude of the consequences is uncertain, but most experts believe the mandate’s elimination will usher in an era of higher insurance prices and lower health coverage rates. The economists at the Congressional Budget Office estimate that as many as 13 million more Americans could become uninsured in 10 years and that insurance premiums will rise by an additional 10 percent each year. The impact won’t start to become clear until 2019, when the provision’s penalties for remaining uninsured officially expire.
The mandate was devised by conservative health care experts at the Heritage Foundation in the late 1980s, who conceived it as a necessary part of a market-based system for providing health insurance in America. The mandate was intended to encourage individual responsibility: More families should be able to choose their own health plans in a market, but they would be expected to have some sort of coverage so they wouldn’t burden their neighbors if they became sick or injured.
“Society does feel a moral obligation to insure that its citizens do not suffer from the unavailability of health care,” Stuart Butler, then Heritage’s director of domestic policy studies, said in a 1989 lecture that was published in a book. “But on the other hand, each household has the obligation, to the extent it is able, to avoid placing demands on society by protecting itself.”
It attracted interest across the political spectrum, becoming a favored policy prescription of some Republicans opposed to President Bill Clinton’s health care overhaul plan in the early 1990s. It was discussed in economics and policy journals. And it later became the basis for a bipartisan health care bill that attracted cosponsors from both parties but never made it to a vote.
The mandate’s first big moment in the spotlight came in 2006, when it became part of a Massachusetts health care law passed by a Democratic state legislature and championed by a Republican governor, Mitt Romney. Romney was persuaded to include it in the health plan after seeing estimates that without it the health plan would cost nearly as much but cover far fewer people. Both Sen. Ted Kennedy, the liberal icon, and Robert Moffit, a senior Heritage official, attended the elaborate Faneuil Hall signing ceremony and praised the legislation.
The mandate became branded as a Democratic policy shortly afterward. Hillary Clinton, who had rejected the idea in the early 1990s, adopted it as part of her presidential platform in the 2008 primaries. Barack Obama, running against her, took some convincing. But as president he ultimately embraced the mandate. It became a central plank of the 2010 health law.
The Affordable Care Act bars insurers from discriminating against customers with a history of previous illness, so a 40-yearold woman with a history of multiple sclerosis must be charged the same price for coverage as a 40-year-old man with a clean bill of health.
The mandate was devised to nudge healthier, less expensive people into the market, lowering the average price of insurance. People who could afford to buy insurance but didn’t would face a tax penalty, and increased participation in the market would help cover the bills of sick people who were nearly guaranteed to sign up, the thinking went.
Once the mandate was attached to the Democratic plan, it became a target of Republican attacks. It was described as un-American, unfair and unconstitutional. The Heritage Foundation disavowed its own idea. A Supreme Court case attacking the provision came close to wiping the whole health law off the books. The mandate became a sort of unloved mascot for a complex, broad law touching many parts of the health care system.
But despite many attempts over the years, Republicans failed to repeal it and to retool large sections of the health law. Instead, the mandate fell victim to an indirect blow — leveled when tax writers realized its repeal would, on paper at least, deliver savings that could be used to lower tax rates.
In practice, the precise effect of the provision has been unclear. The Obama administration had made the mandate somewhat porous, with a long list of life circumstances that would exempt people from having to pay a penalty. Some economists have argued that the penalties are too small to encourage the truly reluctant to enroll. The CBO said it was re-evaluating its own assumption but thought it had probably overestimated the provision’s impact on premiums and insurance enrollment. Still, some mandate enthusiasts continue to argue that the provision’s disappearance will lead to a death spiral of ever-escalating insurance premiums and eventual market collapses.
Those questions, once largely academic, will get real-life answers in coming months. The end of the mandate will establish a sort of natural experiment, in which its influence will become much more clear. Some states may not wait to find out. Policymakers in several blue states are weighing state-level insurance mandates. Those policy descendants may help settle the question of the importance of the mandate to the design of Obamacare, with its market-based system for expanding insurance coverage.
“For better or for worse, we’re going to find out what the answer is,” said Benedic Ippolito, a research fellow at the American Enterprise Institution, who recently wrote about the question. He wished the mandate well: “We hardly knew ye.”