If the Supreme Court knocked out the health care reform law’s individual mandate, but preserved everything else, the sky would not fall, according to a new analysis from RAND Health.
The study, published on Thursday, looked at the effects of enrollment and premium increases in a universe in which health care reform stayed on the books without the controversial requirement that everyone have health insurance or pay a fine. In briefs before the Supreme Court, the Obama administration is arguing that the mandate is the key piece of a larger regulatory structure that expands coverage without causing premiums to skyrocket.
The experiences of states that have tried insurance reforms without a mandate bear out this argument, and two prior studies of the federal law concluded that prices would go way up and enrollment way down without a requirement to buy insurance.
The argument for the mandate--originally made by conservatives during 1990s-era efforts at health care reform--is that without it, too many younger, healthier people will gamble on going without health insurance, driving up costs as only those with a greater immediate need for insurance buy it.
The RAND report agrees with those other analyses that fewer people would have health insurance without the mandate—87 percent of the non-elderly population versus 91 percent with a requirement. And it also concludes that insurance premiums would increase.
But by looking at the actual premiums new enrollees would pay, RAND finds that prices for most individuals would rise by only 2.4 percent, compared to the 10 percent or higher average premiums calculated by the prior studies. That could be a difference between what some critics have called a “death spiral” of adverse selection and the sort of change that would keep insurance relatively affordable for those who choose to buy it.
The RAND report did not, however, conclude that health care reform without a mandate would be a big bargain for the government. Because more people who bought insurance without a mandate would be old and sick, the government’s bill for tax credits to help middle-income Americans afford their premiums would not go down by very much. If Congress made no other policy changes, the cost would be $109 billion with a mandate versus $99 billion without—a difference in per-person cost of $7,468 versus $3,659.
According to RAND’s Christine Eibner, the report shows that the mandate could probably be severed from the rest of the law without causing calamitous results. But that doesn’t necessarily make it a good idea.
“That depends on your policy goals,” she said.