The individual mandate cheatsheet

Your guide to ACA's most controversial provision

From the time President Obama signed the Patient Protection and Affordable Care Act, one of the most controversial components of the law was the individual mandate. This provision requires every American who can afford insurance coverage to purchase some kind of minimally comprehensive policy. Presumably, with the other measures that the ACA will enforce (such as cost control, no pre-existing condition limitations, etc.), insurance will become affordable for a much wider group of people, and by the time the mandate goes into effect in 2014, purchasing insurance should, theoretically, be no problem. 

The individual mandate is based on the commerce clause of the Constitution. But critics decry the basis as flimsy, claiming the mandate is, in fact, unconstitutional. As the mandate debate creeps closer to the Supreme Court, supporters of the ACA are left to wonder if the most crucial aspect of the law has any legs to stand on.

Criticism

The mandate has drawn sharp criticism for its basis in the commerce clause and the simple fact that it forces people to purchase something they may have no interest in purchasing. Although the provision has a system to protect those who cannot afford insurance (if the price of the lowest-cost plan exceeds 8 percent of your annual income, you get a waiver), critics argue it violates the rights of those who simply don't care to purchase health insurance. Proponents, meanwhile, argue that without the mandate, the ACA simply won't be able to survive.

Dr. Len Nichols, director of the Health Policy Program at the New America Foundation, called the mandate an absolutely necessary condition to universal health care, stating that without a mandate, only about half of uninsured Americans, maximum, would seek coverage under what would become non-compulsory reform. Insurance companies have also traditionally supported a mandate, partly because with non-compulsory reform and guaranteed issue, it's possible (even likely) that only the very sick will apply for coverage. Michael Moore, however, likened the individual mandate to a bail-out for the insurance companies.

Opposition to the mandate is bi-partisan. Though Republicans are certainly more outspoken about the provision, many liberals have come out against the mandate as well.

For example, Democracy for America, a group founded by extreme-left party member Howard Dean, said of the mandate, "The bill doesn't actually 'cover' 30 million more Americans — instead it makes them criminals if they don't buy insurance from the same companies that got us into this mess." And public opinion polls from 2009 through 2011 have found Americans consistently rejecting the idea of penalizing those without health insurance.

Cost

Some proponents of the individual mandate contend that enforcing the provision will save money because it will force the so-called "free riders" (those without health insurance who seek care at hospitals, increasing the cost of care for everyone else who has to foot their bill) to pay for their own premiums. In fact, America's Health Insurance Plans believes so strongly in the necessity of the mandate that Karen Ignagni, AHIP president, made inclusion of the provision a requirement for industry supprt of the ACA.  

But others believe that the mandate does more harm than good. According to an analysis by the non-partisan Congressional Budget Office, eliminating the mandate would:

  • Increase the number of uninsured by about 16 million people, resulting in an estimated 39 million uninsured Americans by 2019.
  • Increase premiums for new non-group policies by 15 to 20 percent relative to the current law.
  • Reduce the number of Americans with employer sponsored insurance coverage by 4 million to 5 million.
  • Reduce the number of Americans with individual coverage by 5 million.
  • Reduce the number of people on Medicaid and the Children’s Health Insurance Program by 6 million to 7 million people.
  • Create higher health spending, on average, for Medicaid enrollees than under the current law.

One of the best ways to see what the individual mandate might cost is to look at an existing model — Massachusetts. Before universal health care was established in Massachusetts, the state had the highet per capita health care costs for any part of the country (except Washington D.C.). After individual mandates were put into place, costs continued to skyrocket. Premiums in the state became higher than anywhere else in the country, and Marcia Angell, a senior lecturer in social medicine at the Harvard Business School and former editor-in-chief at the New England Journal of Medicine, said requiring people to buy insurance at whatever price the companies choose to charge became a windfall for the insurance companies.

In other states, such as New York, community rating and guaranteed issue are available, without mandates and without the premium jumps seen in Massachusetts.

In the courts

The health insurance mandate marks the first time the federal government is requiring citizens to purchase a product from a private company, and so naturally this kind of precedent creates controversy. Several states have joined together in a law suit to challenge the constitutionality of the individual mandate, and it looks as if the provision will make its way all the way to the Supreme Court.

All over the country, states and organizations brought suits against the health reform law. Lawsuits were started in Virgina, New Jersey, California, and Ohio. But it was Florida's effort that stuck: eventually, 25 other states joined Florida in the case. A lower court struck down the entire Affordable Care Act as unconstitutional, but the Obama administration appealed. The case was eventually heard by the 11th U.S. Circuit Court of Appeals. Again, the mandate was found to be unconstitutional (although, unlike the previous court, the 11th Court did not find the overall bill to be unconstitutional.)

Meanwhile, in Cincinnati, a federal appeals court determined that Congress can require citizens to carry insurance.

The case is expected to go to the highest appeals court, and eventually continue on to the Supreme Court.

Lawyers on the opposing side of the mandate say the federal law exceeds the bounds of the commerce clause by regulating "economic inactivity" — a person's decision not to buy a product. Essentially, the argument is that the law forces inactive citizens to become consumers of a product which they do not want to purchase. Opponents also claim that, once it's legal for Congress to mandate that Americans purchase insurance, it will be easy to mandate that they purchase other products, too, such as cars or houses or computers. The mandate's supporters say that is a stretch, and that the provision is well within the confines of the commerce clause.

BenefitsPro coverage

BenefitsPro has extensive coveage of the individual mandate court decisions, broker discussions, and more:

Brokers weigh individual mandate

Employers consider ending health coverage

Officials: 11th Circuit PPACA ruling clouds benefits picture

Mandate inches toward high court

Appeals court strikes health insurance requirement

Appeals court upholds health reform

US judges appear open to reform challenge

No mandate left behind

Appeals court in Va. hears health care cases

Reform headed back to court

States ask US court to overturn health overhaul

House puts health measure on Florida ballot

Actuaries support individual mandate

Voters concerned about indvidual mandate

Half of Americans oppose individual mandate, poll reveals

Study: Dependent-child mandate will increase health premiums

Survey: Mandate won't push companies to drop health benefits

Mandate could kill jobs, add billions to employer costs

Mandate for more money

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