Time to spike ACA’s individual mandate

THE individual mandate in Obamacare, which imposes financial penalties on people who don’t buy government-approved insurance policies, was described by its architects as crucial to making the law work. In practice, it has mostly penalized middleclass families while providing no benefit. It’s time to repeal the mandate, as proposed by Senate Republicans this week.

The original argument for the mandate made sense, on the surface. Because the Affordable Care Act requires insurance companies to cover everyone, including those with pre-existing conditions, people have to be forced to buy policies. Otherwise, they will simply wait until getting sick to obtain insurance, and rates will skyrocket.

Yet a recent issue brief by Chris Pope, a senior fellow with the Manhattan Institute, reviews the facts on the ground since the law was implemented. Pope’s conclusion is blunt: “It has done little to increase enrollment, to reduce insurance premiums, or to alleviate the burden of uncompensated care.”

When the Congressional Budget Office first released its estimates, as the law was being considered by Congress, it predicted the number of uninsured people would decline by 19 million in 2014. Instead, the number fell only by 9 million that year.

Because the mandate penalty increased significantly over time, some thought it would eventually lead more people to buy insurance. But only marginal reductions in the number of uninsured were observed by 2016.

Obamacare’s defenders said the law would reduce uncompensated care at hospitals by half, and argued the individual mandate would be a primary cause of reduction. Instead, Pope notes, a recent study found charity care and bad debt reported by hospi- tals fell no more than 24 percent on average in states that embraced the Affordable Care Act the most by expanding Medicaid. In other states, there was almost no reduction in uncompensated care.

One reason for the mandate’s failure to live up to proponents’ promises is that no one is willing to implement the mandate to its full extent. Pope notes the law allows the Department of Health and Human Services to grant a wide range of exemptions “and the Obama administration did this for large categories of enrollees for reasons of low income, unavailability of affordable plans, or religious affiliation.” In 2014, the CBO estimated 23 million of 30 million uninsured would qualify for an exemption.

In practice, the individual mandate — declared a tax by the U.S. Supreme Court — has served mostly to financially penalize people already facing financial challenges.

“The mandate is largely a tax on individuals in precarious circumstances — those lacking coverage through their employers — such as owners of small businesses, recent immigrants, or those trying to patch together a middle-class income by working several part-time jobs,” Pope writes.

That assessment is backed by other sources. The Wall Street Journal said in a recent editorial that “more than one in three households that paid the ‘individual shared responsibility payment’ in 2015 earned less than $25,000 and more than 90 percent made less than $75,000, according to IRS data.”

Put simply, the individual mandate provides no real benefit, and its chief impact is to augment the financial challenges of people already struggling to get by. So why keep it on the books?