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Expanding Enrollment Without the Individual Mandate: Options to Bring More People into the Individual Market

young health enrollee running
  • Even with repeal of the ACA’s individual mandate and other recent changes, options exist for increasing health coverage and making it more affordable

  • Millions of Americans could gain health coverage in the individual market if the government increased premium tax credits, made them available to more people, and expanded reinsurance

  • Even with repeal of the ACA’s individual mandate and other recent changes, options exist for increasing health coverage and making it more affordable

  • Millions of Americans could gain health coverage in the individual market if the government increased premium tax credits, made them available to more people, and expanded reinsurance


  • Issue: Recent changes to the Affordable Care Act, including elimination of the individual mandate penalty, the halting of federal payments for cost-sharing reductions, and expanded access to short-term plans, may reduce enrollment in the individual market.
  • Goal: Analyze options to increase enrollment, accounting for recent policy changes.
  • Methods: RAND’s COMPARE microsimulation model is used to analyze six policies that would expand access to tax credits, increase their generosity, and fund a reinsurance program.
  • Key Findings and Conclusions: The options would increase individual market enrollment by 400,000 to 3.2 million in 2020. Net increases in total enrollment (300,000 to 2.4 million) are smaller because of offsetting decreases in employer-sponsored insurance. The largest gains are possible through two options: large-scale investment in reinsurance, and extension of tax credits to higher-income people combined with increases in the generosity of existing tax credits. If funded through a fee on health plans, reinsurance could be implemented without increasing the federal deficit. Additional taxpayer costs would increase by $1 billion to $23 billion, depending on the policy. While enhanced tax credits for young adults would lead to small coverage gains, they would entail the lowest costs to taxpayers among the six options.


In late 2017, Congress and the Trump administration have made or proposed policy changes that could affect enrollment and affordability in the individual health insurance market, which covers approximately 17.6 million people.1 First, the administration halted federal payments for cost-sharing reductions (CSRs), which are subsidies that help people pay for out-of-pocket costs like copayments and deductibles. Although the federal government has ceased payments, insurers are required by law to make the CSRs available to those eligible — that is, tax-credit-eligible silver plan enrollees with incomes up to 250 percent of the federal poverty level. Most insurers have raised the silver premiums to fund these payments.2 This silver premium increase results in higher tax credit amounts, which are calculated based on the second-lowest-cost silver plan available to an enrollee. Second, a federal rule proposed by the Departments of Treasury, Labor, and Health and Human Services would allow insurers to sell short-term plans that provide coverage in 12-month periods, rather than the three-month periods previously allowed.3 Short-term plans are exempt from Affordable Care Act (ACA) requirements, such as “guaranteed issue,” under which all applicants are offered coverage; coverage of preexisting conditions; and minimum essential benefits. Finally, Congress eliminated the ACA’s individual mandate penalty as part of the Tax Cuts and Jobs Act of 2017.4

In this issue brief, we update estimates of several policy options to expand enrollment in the individual market first analyzed in a prior brief (Exhibit 1),5 accounting for the federal changes described above.6 The policies we consider aim to make individual market insurance more affordable for consumers, either through tax credits or reinsurance. We based the design of the reinsurance scenarios on the ACA’s transitional reinsurance program, which was in effect from 2014 through 2016. As was the case under this program, we assume reinsurance would be financed through a per-enrollee fee levied on all health plans, including employer-sponsored plans. We assess changes in insurance coverage, individual market premiums, the federal deficit, and taxpayer costs.


Insurance Coverage

Exhibit 2 shows the changes in health insurance enrollment for each of the policy options considered. The number of total insured increases in all the scenarios relative to current law, ranging from an additional 300,000 individuals in the enhance advance premium tax credits (APTCs) for young adults and standard reinsurance scenarios to 2.4 million individuals in the increase and extend APTCs scenario. In all cases, the increase in individual market insurance enrollment is higher than the increase in total insurance enrollment, because of reductions in employer-sponsored coverage when the individual market is more attractive. The largest increase in individual market enrollment occurs in the generous reinsurance scenario. In general, these increases in coverage are slightly smaller than the insurance enrollment changes reported in our earlier brief (see Exhibit A3).

Individual Market Premiums

Exhibit 3 shows the estimated changes in individual market premiums under each scenario. Premiums fall in all scenarios except the one that increases APTCs for the currently eligible population, in which the premium change is negligible. Among the scenarios modifying APTCs, extending them to people with incomes above 400 percent of the federal poverty level has a relatively large effect — approximately 2 percent to 4 percent premium reductions — because of improvements in the risk pool as healthy, low-cost people enroll. Enhancing APTCs for young adults has a more modest effect, partly because it has a smaller effect on individual market enrollment.7

The largest premium decline occurs in the generous reinsurance scenario, which reduces the age-specific premium by about 17 percent for bronze plans and nearly 11 percent for silver plans. The reduction in silver premiums is smaller because we assume that insurers load the cost of CSRs onto silver premiums.

Federal Deficit

The four policies modifying APTCs would increase the federal deficit relative to current law (Exhibit 4). Of these four scenarios, enhancing APTCs for young adults yields the smallest net increase in the federal deficit ($1.1 billion); the combined policy that both increases and extends APTCs yields the largest net increase ($18.8 billion).

The reinsurance scenarios reduce the federal deficit relative to current law. As modeled, reinsurance is funded by per-enrollee fees on employer-sponsored and individual plans; there are no direct federal costs. The federal deficit declines because lower premiums result in reductions in federal spending on APTCs. We estimate the federal deficit would decrease by approximately $2.3 billion in the standard reinsurance scenario and $8.8 billion in the generous reinsurance scenario.

Taxpayer Costs

Exhibit 5 shows the additional cost to taxpayers under each of the policies. We measure costs to taxpayers by adding the net deficit effect and the cost of the reinsurance fees, which we assume will be passed on to enrollees in the form of higher health plan premiums. We estimate the per-enrollee fee needed to fund the standard reinsurance program is $37 and the fee needed for the generous reinsurance program is $197 per enrollee per year. For the first four policies, the only cost to taxpayers is the increase in the federal deficit. The two policies that result in the largest increase in number of insured (i.e., increasing and extending APTCs and generous reinsurance) cost the most from the perspective of taxpayers.

Although enhanced APTCs for young adults yield the smallest number of newly insured individuals among the policies considered, it is the most efficient policy in terms of taxpayer costs per new enrollee (Exhibit 6). At the higher end, the reinsurance programs and increasing APTCs for the currently eligible population cost between $11,000 and $15,000 per new enrollee. Across scenarios, those that require greater investments in the previously enrolled population tend to have higher costs per new enrollee. For example, increasing APTCs, which has the highest cost per new enrollee, raises tax credit spending for those who would have enrolled anyway.

In our prior analyses, we found similar relative efficiency between the policies in terms of taxpayer costs per new enrollee. However, in this analysis costs per new enrollee increase in every scenario. This increase results from insurers increasing silver premiums to offset the costs of CSRs without federal payments; the availability of short-term plans for 12-month periods; and elimination of the individual mandate penalty.


We analyzed six options — all of which have been discussed by policymakers — to expand individual market enrollment and found that each could increase total insurance enrollment by 0.3 million to 2.4 million, and individual market enrollment by 0.4 million to 3.2 million. These options would make insurance less expensive for enrollees by enhancing tax credits, extending tax credits to a broader share of the population, or adding reinsurance to the individual market. All approaches would increase costs for taxpayers, either by adding to the federal deficit or by requiring new fees on health plans. Generally, policies that insure more people — such as generous reinsurance or a combined policy that both extends tax credits and increases their value — cost more. If funded through a fee on health plans, reinsurance could increase enrollment while simultaneously reducing the federal deficit but would increase costs for group and self-insured health plan enrollees. Among the policies considered, providing enhanced tax credits to young adults yields the lowest taxpayer cost per new enrollee.

This research updates analyses we conducted before the Trump administration halted CSR payments and Congress eliminated the individual mandate penalty. Despite these major changes, the policies remain nearly as effective at expanding enrollment although taxpayer costs per new enrollee have increased. The higher costs reflect the federal decision not to pay CSRs, which increased tax credit payments, as well as the fact that without mandate penalties it is harder to induce people to enroll in insurance. It is still possible to expand coverage in the individual market but, without CSRs paid by the federal government and an individual mandate, it will require a greater investment of resources.


1. Mark Farrah Associates, A Brief Look at the Turbulent Individual Health Insurance Market (Farrah, July 19, 2017).

2. Rabah Kamal et al., How the Loss of Cost-Sharing Subsidy Payments Is Affecting 2018 Premiums (Kaiser Family Foundation, Oct. 2017).

3. U.S. Department of the Treasury, Internal Revenue Service, U.S. Department of Labor, Employee Benefits Security Administration, and U.S. Department of Health and Human Services, Centers for Medicare and Medicaid Services, “Short-Term, Limited-Duration Insurance (Proposed Rule)Federal Register 83, no. 35 (Feb. 21, 2018): 7437–47; and President Donald J. Trump, Promoting Healthcare Choice and Competition Across the United States, Executive Order 13813 (White House, Oct. 12, 2017).

4. Representative Kevin Brady, An Act to Provide for Reconciliation Pursuant to Titles II and V of the Concurrent Resolution on the Budget for Fiscal Year 2018, H.R. 1, 115th Congress, introduced Nov. 2, 2017.

5. Christine Eibner and Jodi Liu, Options to Expand Health Insurance Enrollment in the Individual Market (Commonwealth Fund, Oct. 2017).

6. Preethi Rao, Sarah A. Nowak, and Christine Eibner, What Is the Impact on Enrollment and Premiums if the Duration of Short-Term Health Insurance Plans Is Increased? (Commonwealth Fund, June 2018); and Christine Eibner and Sarah A. Nowak, The Effect of Eliminating the Individual Mandate Penalty and the Role of Behavioral Factors (Commonwealth Fund, July 2018).

7. With the ACA’s age-rating rules, younger adults are charged less than older adults, and as such do not contribute as much effect on insurers’ risk pools.

Publication Details



Jodi Liu, Associate Policy Researcher, RAND Corporation


Jodi Liu and Christine Eibner, Expanding Enrollment Without the Individual Mandate: Options to Bring More People into the Individual Market (Commonwealth Fund, Aug. 2018).