Individual mandates: Can you make Americans buy health insurance?

The Patient Protection and Affordable Care Act attempts to balance the adverse selection inherent in its guaranteed issue approach by enforcing an individual mandate to purchase insurance. This individual mandate will be at the heart of the Supreme Court proceedings later this month.

Media coverage of insurance industry practices such as recission have made many Americans sympathetic to the idea of guaranteed issue without regard to preexisting conditions. But guaranteed issue without a mandate of some kind  may have some serious consequences.

So, how does the individual mandate in PPACA actually work, and how would it work in practice? Although the effects of any complex policy are difficult to predict, Milliman consultant Paul Houchens recently wrote a detailed treatment of the subject, Measuring the Strength of the Individual Mandate.

If the Supreme Court strikes down the individual mandate, there are other policy options that could potentially achieve similar results. These were collected in a report by the Government Accountability Office based on interviews with industry experts:

  • Modify open enrollment periods and impose late enrollment penalties.
  • Expand employers’ roles in autoenrolling and facilitating employees’ health insurance enrollment.
  • Conduct a public education and outreach campaign.
  • Provide broad access to personalized assistance for health coverage enrollment.
  • Impose a tax to pay for uncompensated care.
  • Allow greater variation in premium rates based on enrollee age.
  • Condition the receipt of certain government services upon proof of health insurance coverage.
  • Use health insurance agents and brokers differently.
  • Require or encourage credit rating agencies to use health insurance status as a factor in determining credit ratings.

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