Arguably the most contentious part of the Affordable Care Act (ACA), the individual mandate, requiring every American to secure healthcare coverage, appears to have made little difference since Congress removed the penalty last year.
Connecticut considered passing a state-level individual mandate both before the ACA and more recently as the ACA has been in peril. But the legislature decided not to pass it several times. It looks like they were right.
Implementation of the ACA in 2014 had made a massive difference in lowering the number of people without coverage. Connecticut’s uninsured rate dropped by 146,000 people between 2013 and 2018. But that’s because we took advantage of the ACA’s tools to expand coverage.
Connecticut was the first state to expand Medicaid to thousands more residents. Thousands more are getting federal subsidies to buy insurance through Access Health CT, our state health insurance exchange, including 30,254 new customers just last year. Also righting a massive injustice, under the ACA people with pre-existing conditions can’t be excluded from coverage.
All of these factors combined to expand coverage, but it’s not clear if many of the uninsured even knew that they were required to buy coverage when the individual mandate existed.
The penalty for not buying insurance was finally eliminated under President Donald Trump.
The ACA’s individual mandate was a response to theoretical concerns from economists and insurers. Insurers, of course, loved the idea that we would all be legally required to buy their product. Without a mandate, economists warned only less healthy people will buy in, raising premiums, causing a death spiral. But it turns out they were wrong.
When Congress removed the penalty, insurers warned that premiums would rise 5%, but in fact they’ve been stable and insurers are doing just fine. In fact, insurers are spending less of our premiums on medical care, only 75% nationally in the last quarter of 2019. Insurer profits on individual plans per person were $131.17 per month in that quarter, up from $9.90 in 2015. Monthly patient days in the hospital are even down a bit.
In Connecticut, we knew the economists were wrong. In 2008, Connecticut considered, and rejected, an individual mandate in SustiNet reforms. In 2018, responding to Congressional efforts to repeal the ACA, several states considered passing state-level individual mandates. Connecticut held a public hearing, but the mandate didn’t pass out of committee.
Mandates are no guarantee of compliance. Connecticut law requires that all drivers have auto insurance, but 9.4% are uninsured. https://www.iii.org/fact-statistic/facts-statistics-uninsured-motorists That rate has always been higher than our rate of healthcare uninsurance, both before and since the ACA.
Very few people are uninsured by choice – it’s an old myth that the uninsured can afford coverage, they just choose not to, and a law will make them buy it. The truth is that the vast majority of uninsured can’t afford to buy insurance. The ACA made coverage affordable for many more people and that’s why the uninsured rate fell.
There are still problems with insurance in Connecticut. The worst problem is that it costs too much for individuals, families, businesses and government. Those costs fall especially hard on families without employer coverage and incomes just above the federal subsidy level who have to pay the full cost. But forcing them to buy unaffordable coverage solves nothing. The individual mandate doesn’t matter. Let’s move on to address the real reasons healthcare is so expensive.
Ellen Andrews, PhD, is the executive director of the CT Health Policy Project. Follow her on Twitter @CTHealthNotes.
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