What Are the Costs of Ending the Individual Mandate Penalties?


The Affordable Care Act’s financial penalties for people who don’t enroll in health coverage will end in 2019, following congressional passage of the new tax law. New research shows that the impact on insurance coverage and costs will depend on many factors, including how consumers behave in response to the change in policy.

In a new Commonwealth Fund report, RAND researchers Christine Eibner and Sarah Nowak draw on early experiences with the individual mandate to project how elimination of the penalties is likely to affect uninsured rates, insurance premiums, and the federal budget deficit. In analyzing different scenarios that make a range of assumptions about consumers’ behavior, the authors estimate the number of Americans with coverage will decline anywhere from 2.8 million to 13 million when the mandate is eliminated. Premiums for bronze marketplace plans, meanwhile, will increase from 3 percent to 13 percent. The deficit impact is less certain, with the possibility of either a decrease of $8 billion in 2020 or an increase of $3.6 billion.

The report’s findings present important considerations for state policymakers contemplating enactment of state-specific health insurance mandates, the authors say. “States implementing their own mandates may be able to increase the impact of the policy by ensuring that affected individuals are aware of the requirement and that enforcement mechanisms are credible and effective.”

Young adult, who may have enrolled in the marketplace because of the individual mandate_1x1 Read the report