Wednesday, January 18, 2012

Without Individual Mandate, Up To 42 Million Would Remain Uninsured

The health reform law with the individual mandate would reduce the number of uninsured by half, from 50 million non-elderly individuals to approximately 26 million, according to new research from the Robert Wood Johnson Foundation and the Urban Institute. Removing the mandate would leave between 40 and 42 million people uninsured. Eliminating the individual mandate also has implications on health care spending and health insurance premiums, the report noted.

Insurance Coverage. Without the mandate, but with robust health insurance exchange participation, the Urban Institute found that 39.8 million people would remain uninsured. Finally, without the mandate and with implementation difficulties, low preference for using the exchange would not have a big effect on insurance coverage, with 40 million Americans remaining uninsured. If this lower exchange preference were combined with a scenario of low subsidy take-up, the number of uninsured would increase to 42.4 million, the Urban Institute found.

Health care spending. With the mandate, government spending would rise from $253 billion to $340 billion. Aggregate employer and individual spending would increase by $11 billion each, and uncompensated care would decrease by 50 percent from $78 billion to $39 billion. Without the mandate, government, employer, and individual spending for coverage would drop due to lower coverage. However, the government would spend only about 3 percent less for less than half the increase in coverage. Additionally, removing the mandate would mean $20 billion more in uncompensated care.

Health insurance premiums. With the mandate, average premiums would be $5,100 annually. On average, premiums would be slightly higher in the exchange than outside it. Without a mandate, but with robust exchange participation, overall non-group premiums would rise about 10 percent due to adverse selection. Adverse selection would continue to increase as exchange participation falls, and premiums would rise. With lower subsidy take-up, average non-group premiums would rise 20 percent, with non-group exchange premiums increasing by 25 percent.

And this research does not take into consideration the cost of lost productivity for uninsured individuals.


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