• Mandate or not, expect state variation

    On The Health Care Blog, Roger Collier speculates about what might happen if the ACA’s individual mandate is struck down as unconstitutional.

    The reactions of individual states to an unconstitutionality finding would presumably reflect their politics, with states to the right of center being able to claim a fundamental failure of reform, especially as premiums increase in the absence of new healthier enrollees. Left-leaning states might take the option, however, of imposing their own individual mandates consistent with their state constitutions—much as Massachusetts did in 2006, although possibly with a different, more effective structure that would further lower the number of uninsured. And that might make for some interesting comparisons.

    Legal thinkers I trust think the mandate won’t be struck down so I don’t spend much time thinking about what might occur if it is. There are also alternative ways to compel folks to purchase insurance so I’m not terribly worried in any case.

    However, I expect that even with a national mandate in place there will be considerable state variation in compliance. With the penalty for noncompliance relatively low, states with populations culturally/ideologically opposed to the mandate will tend to have higher uninsurance rates (controlling for all other relevant factors). Those more likely to need and use insurance will buy it, forcing premiums higher–the adverse selection problem. (There is also likely to be variation in compliance with payment of the tax penalty.)

    What will policymakers in states with high uninsurance rates and, perhaps, high premiums due to the expected adverse selection do or say about the individual mandate then? When premiums are increasing disproportionately across states due to disproportionate compliance with the mandate won’t mandate enforcement begin to look like a good idea? Don’t most voters actually want (and have) insurance coverage and pay premiums? Won’t they demand that something be done about the free riders?

    The long-term outlook for an anti-mandate position doesn’t seem good.

    • They will reduce coverage requirements for insurance in their states. This will shift more of the costs to the consumer. Should be an interesting test of ideas.

      OT- But have you had a chance to look at the alleged successes of HSA type programs that Mitch Daniels touts?


    • Steve
      See this post. The comment thread is instructive. I heard Daniels speak at an AEI conference recently, and he knows his stuff (his experience in health care and pharma puts him in a different category as far as govs), but he is touting his health plan as if he has solved the nation’s ills. It is intriguing, but all that glitters is not gold.



    • Neat, Thx! I must confess that I was looking up relevant PA code when I realized that the ACA also, IIRC, mandates coverage requirements. They would also have to have those overturned I believe. I am therefore probably wrong in my assumption unless they also have that overturned as part of the appeal against the individual mandate. My bad.


    • Another alternative to a mandate might be a penalty similar to that used with Medicare Part B. You are free to opt out, but if you opt in later your premium is increased by 10% for every year you opted out. There is no upper limit to the penalty, and it continues for life.

      A fairer incentive would be a tax credit worth 20% or 25% of the premium for those who purchase qualifying coverage (e.g. community rated and paid for with after-tax dollars). Fairer because it would give partial equity in tax treatment between individual purchasers and those with employer-sponsored coverage.