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

or significant government subsidies, government spending for those newly insured would more than double, rising to $7,468, according to the RAND Health study.

"The individual mandate is critical not only to achieving near-universal health care coverage among Americans, but also to yielding a high value in terms of federal spending to expand coverage," Eibner said. "Without the individual mandate, the government would have to spend more overall to insure a lot fewer people."

One of the most contentious provisions of the 2010 Affordable Care Act is the individual mandate that requires most adult Americans to either obtain health coverage or pay an annual fine. Supporters say the mandate is necessary to encourage young, healthy adults to get coverage, and help spread costs and risks across a larger, healthier group of insured individuals.

If the mandate is eliminated, there is concern that the insurance exchanges established under the Affordable Care Act would suffer from "adverse selection" as only sicker, higher-risk adults would sign up for coverage. Such a trend could lead to higher per-member spending and drive insurance premiums higher.

Several other research groups previously studied what might occur if the individual mandate was eliminated. The RAND study predicts dips in overall insurance coverage and changes in government spending similar to those predicted by the earlier studies.

However, Eibner and co-author Carter C. Price used a more-precise method to estimate the effect that ending the individual mandate might have on insurance premiums. It does not predict price consequences as great as those predicted by others.

Other research teams estimated the overall average increase in premiums that would be expected if the individual mandate is eliminated. The RAND analysis focuses on the annual increase that might be faced by individuals, taking the age of enrollees into account.

Under the Affordabl
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Contact: Warren Robak
robak@rand.org
310-451-6913
RAND Corporation
Source:Eurekalert

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