NCPA - National Center for Policy Analysis

Importance of the Individual Mandate to the Health Reform Law

March 27, 2012

The individual mandate will be a primary topic of discussion when the Patient Protection and Affordable Care Act (PPACA) comes before the Supreme Court.  Long recognized as one of the 2010 health care law's most controversial provisions, the mandate requires the purchase of health insurance, imposing a tax penalty for those who don't participate, says U.S. News & World Report.

The law can be carried out even if the individual mandate is struck down.  But John C. Goodman, president of the National Center for Policy Analysis, emphasizes that even if the law is found to be entirely constitutional, it will still face a number of practical obstacles that will limit its effectiveness.

  • Goodman's analysis of figures from the Congressional Budget Office suggest that though they vary by region and age, typical insurance premiums in 2016 will average about $5,800 for an individual and $15,200 for a family of four.
  • Meanwhile, according to the Henry J. Kaiser Family Foundation, fines for noncompliance will amount to $695 for individuals and $2,085, or 2.5 percent of total taxable income for families.
  • Essentially, the current system will likely fail to achieve the broad participation among the nation's young and healthy that it hopes to.

Goodman also identifies an additional problem with the current scheme of premiums and fines: it offers a substantial opportunity to game the system.  The disparity between the fines and premiums will encourage people to wait until they're sick to buy insurance and cancel it when they're well, causing costs to skyrocket.

Source: Margaret Steele, "Analysts Debate Importance of the 'Individual Mandate' to Health-Reform Law," U.S. News & World Report, March 22, 2012.

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