Individual Mandate Repeal:
Impact on the Affordable Care Act
The Patient Protection and
Affordable Care Act, commonly known as the Affordable Care Act (ACA), was
passed into law in 2010. Implementation
of the law was spread out over four years, with every citizen required to carry
a minimum level of health insurance by March 31st, 2014. Those failing to submit proof of health
insurance coverage with tax returns faced an income tax surcharge. The intent of this requirement, often
referred to as the individual mandate, was to help lower overall spending on
healthcare by the federal government.
In 2017, a new tax reform
bill was passed that included a repeal of the individual mandate required by
the ACA. Starting in 2019, citizens will
no longer be required to provide proof of health insurance with their tax
returns (Mukherjee, 2017). The impact of
the removal of the individual mandate is not yet known, but speculations and
estimations indicate that premiums will increase and fewer citizens will carry
health insurance, which could have consequences on cost and quality of care
available.
One of the main goals of the
ACA was to reduce the number of emergency room visits by focusing on
preventative care. Researchers at John’s Hopkins published a paper in the
Annals of Emergency Medicine on this topic.
Their study took place in Maryland over an 18-month period. During that
period, access to health insurance increased by 20 percent, but visits to
emergency departments only decreased by one percent. It was estimated by the authors that patients
who newly obtained health insurance continued to use the healthcare services to
which they were accustomed, rather than seeking out a primary care physician
and preventative care (Xu, 2017).
An article published by the
Washington Examiner written by Robert King (2018) investigated the potential
changes that could result from the repeal of the individual mandate. In the article, King outlines several
potential outcomes including the raising of health insurance premiums. In the article, he states the Congressional
Budget Office predicts that up to 4 million people will choose to forgo
insurance in 2019 and up to 13 million people will loose coverage. This could result in a 10 percent premium
raise every year, starting in 2019. One
of driving factors for premium increase will be linked to the population most
likely to forgo coverage – the young and healthy. Without a penalty or fine, this population
will lack an incentive to obtain health insurance. The loss of their contribution negatively
impacts the risk pool (King, 2018).
Another
potential problem is the closure of federal exchanges, which were created to
meet a need in
states that did not expand their Medicaid programs. Without the individual mandate, there might
not be enough interest in the federal exchanges, especially in states with
lower populations. Many states already
only have one federal exchange option, and those signing up are usually in a
higher risk population than is possible to sustain the insurance offerings
(King, 2018).
In addition to the removal of
the individual mandate, the tax reform bill also allows for the return of
short-term insurance plans, as well as plans that do not include ten key
requirements for a health insurance plan to qualify under the ACA, such as
maternity care (King, 2018). These short
term and lower-risk plans might attract individuals looking for coverage with a
lower premium, drawing more customers away from the federal exchanges.
Fortune magazine also published
an article regarding the future of the ACA in light of the tax reform bill
(Mukherjee, 2017). In that review, it is
estimated that Americans will not be largely impacted by the removal of the
individual mandate. They propose that a
majority of American citizens already have health insurance coverage through
their employer, Medicare, Medicaid, or the military, so will not greatly be
affected by the tax reform bill. Options
to purchase health insurance increased with the passage and implementation of
the Affordable Care Act and these options are likely to stay in place,
regardless of the removal of the individual mandate. They did predict that premiums would go up,
on average, by 10%, but for some individuals, increased federal subsidies will
offset those increases. It is estimated
that by 2027, 13 million fewer Americans will have health insurance due to the
removal of the individual mandate (Mukherjee, 2017).
In FindLaw (2018), the same
potential outcomes are outlined.
However, the authors point out that many aspects of the ACA will stay
the same, which comes with advantages and disadvantages. There will continue to be options available
to those who are not covered by their employer, Medicare, Medicaid, or the
military, however as long as individuals cannot be denied insurance coverage
due to pre-existing conditions, the removal of the individual mandate might
encourage citizens to wait until they have a health emergency before signing up
for coverage.
As mentioned above, the true
outcome of the repeal of the individual mandate will not likely be known until
2020 or beyond. However, based on the
literature review, the following implications are most likely:
1. Premium rate increases, by as much as ten
percent each year.
2. A loss of health insurance coverage by up to
13 million individuals.
3. A reduction in federal exchange options due
to loss of enrollment.
4. Continued access to health insurance options,
with new options becoming available in the form of short-term policies with
reduced coverage.
5. Overuse of emergent care will likely still
continue as more individuals lose health insurance coverage.
References
FindLaw (2018). Obamacare basics: What is the Affordable Care
Act? Retrieved from
King, R. (2018,
January 14). The Obamacare individual mandate
is repealed. Here’s what’s
obamacare-individual-mandate-is-repealed-heres-whats-next
Mukherjee, S.
(2017, December 20). Tax bill individual
mandate. Fortune. Retrieved from
http://fortune.com/2017/12/20/tax-bill-individual-mandate-obamacare/
Xu, T. (2017,
July 24). Research shows one aspect of
the affordable care act has no significant
impact on emergency department
patient visits. John Hopkins Medicine.
Retrieved from
https://www.hopkinsmedicine.org/news/media/releases/research
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