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Ending individual mandate would not dramatically hike insurance prices, study finds
Date:2/16/2012

A new RAND Corporation study concludes that eliminating a key part of health care reform that requires all Americans to have health insurance would sharply lower the number of people gaining coverage, but would not dramatically increase the cost of buying policies through new insurance exchanges.

The study comes as the U.S. Supreme Court prepares to hear arguments in March regarding the constitutionality of the individual mandate, a key provision of 2010's Affordable Care Act.

According to estimates created using a microsimulation model created by the RAND Comprehensive Assessment of Reform Efforts (COMPARE) program, the number of Americans predicted to get coverage in 2016 under the Affordable Care Act would drop from 27 million to 15 million if the individual mandate were eliminated.

Despite that drop, the study estimates that eliminating the individual mandate would increase an individual's cost of buying insurance through the individual exchanges by just 2.4 percent.

Under health care reform, health insurance exchanges will be established to provide policies to individuals who do not have work-based coverage and those who work for small employers. A key issue underlying the relatively small increase in premiums relates to the manner in which premiums in the exchanges are allowed to vary by age.

"Our analysis suggests eliminating the individual mandate would sharply decrease coverage, but it would not send premiums into a 'death spiral' that would make health insurance unaffordable to those who do not qualify for government subsidies," said Christine Eibner, the study's lead author and an economist at RAND, a nonprofit research organization.

Another consequence of repealing the individual mandate would be a sharp increase in the amount of government spending for each person newly enrolled in a health insurance plan. Because most individuals who remain enrolled if the mandate is eliminated are eligible f
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Contact: Warren Robak
robak@rand.org
310-451-6913
RAND Corporation
Source:Eurekalert

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