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Can The Health Care Law Survive Without An Individual Mandate?

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"Can The Health Care Law Survive Without An Individual Mandate?"

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It can, but policy makers will have to devise some other way of compelling younger healthier applicants to purchase health insurance before they become sick and expensive. In light of Friday’s appeals court ruling against the Affordable Care Act’s individual requirement, below are several alternatives to making the law work without it:

1. Single Payer or Medicare for all – The constitutionality of using tax dollars to provide health coverage is not in doubt (see: Medicare, Medicaid). But, given the political landscape, this is probably the most improbable solution.

2. Public option – The court opposed to requiring Americans to buy a private product. By adding a public option you’re possibly eliminating that problem and even lowering premiums (and in turn, government expenditures on subsidies).

3. Auto enrollment - An individual is automatically enrolled in insurance unless she or he opts out. This obviously would only apply to people with employer coverage and those employers could have an incentive to lower their health care spending by actively discouraging workers to opt of insurance and younger employees would be more prone to go without coverage. Jon Gruber has estimated that approximately 24 million will gain coverage.

4. Late enrollment penalty - An individual can opt-in to insurance but pay a penalty for enrolling at a later date. But how will this work? Will the government really tell a 30-year-old individual with cancer that they can’t get insurance coverage because they didn’t sign up when they were 27 years old? And of course, if younger people stay out of the risk pool, costs will skyrocket. A similar proposal would allow insurers to charge applicants higher deductibles.

5. Multi-year waiver – People can opt out of buying insurance, but for a price. They’d have to sign a waiver on their tax return saying they would be ineligible for federal subsidies for a certain period of time, such as five years.

6. Open enrollment period – Individuals who purchase insurance after a certain pre-determined open period have to pay a lot more for coverage. This option can suffer from the same problem as number 4 (lower participation would lead to higher premiums since healthy people would stay out of the risk pool).

7. Encourage states to adopt their own mandate – As the Massachusetts example proved, there are no Constitutional objections there. States are well within their right to require people to purchase coverage.

8. Rewrite the mandate as a tax – What Congress should have done in the first place, since, as the court explained, it wouldn’t have any objection to Congress taxing (rather than penalizing) people without insurance.

Unfortunately, it is very hard to “score” these alternatives and I’m not aware of any economists (outside of Gruber) who have modeled the coverage and premium rates for these options. One big advantage of the mandate is that it has already succeeded in lowering the number of uninsured (see Massachusetts) and if we go down any other road, we could end up insuring far less people at a higher cost.

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