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CCH® BENEFITS — 04/10/12

ACA’s Individual Mandate Would Affect Few, Stabilize Health Insurance Market, Premiums: Studies

from Spencer’s Benefits Reports: As the U.S. Supreme Court considers the fate of the Patient Protection and Affordable care Act (ACA) individual mandate that requires all individuals to either have health insurance coverage or pay a fine, public support for the mandate continues to be low, Kaiser Family Foundation research shows. The legal spotlight on the mandate shed by the ACA’s opponents has not only made the mandate the best known of the ACA’s provisions (two-thirds know that it’s part of the ACA) but also shaped public perception. However, public opinion of the requirement remains “malleable and basic factual information and messages can sway Americans’ opinion,” Kaiser asserted in its new Data Note, A Snapshot Of Public Opinion On The Individual Mandate.

The December 2011 Kaiser tracking poll found support for the mandate varied from 17 percent to 61 percent, depending on which messages or information opponents or supporters of the mandate hear on the issue. By far the most effective information in terms of changing people's minds is that, "under the reform law, most Americans would still get coverage through their employers and so would automatically satisfy the requirement without having to buy any new insurance.” After hearing that message, favorable views of the mandate rose 28 percentage points to 61 percent.

In March 2012, Kaiser found that only one in three felt favorable toward the mandate, compared to majorities of the public who favor the law’s other provisions, such as tax credits to small businesses that offer coverage (80 percent), as well as the consumer-friendly requirement that plans include easy-to-understand summaries of their benefits and costs (70 percent). Not even a majority of Democrats, who favor the law overall, have a favorable view of the mandate (45 percent). In addition, between November 2011 and March 2012, intense opposition to the mandate (the proportion who say they have a “very” unfavorable view of it), increased 11 percentage points from 43 percent to 54 percent.

Supporters of the mandate cite as a reason that everyone should have coverage (17 percent) and that people should be responsible for their own insurance and pay their fair share (16 percent). Those opposed say that government should not be able to force people to do something (30 percent), health insurance is too expensive (25 percent), and the fine for noncompliance (22 percent).

Most of the Kaiser survey participants do not see the Court’s ruling on the mandate as the final word on the ACA. Six in ten (62 percent) expect that if the Court strikes down the mandate, some parts of the law will continue to be implemented, while half as many (28 percent) think this will effectively mean the end of the entire law.

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Mandate Would Affect Few

A recent study by the Urban Institute found that “if the ACA were in effect today, 94 percent of the total population (93 percent of the nonelderly population) or 250.3 million people out of 268.8 million nonelderly people—would not face a requirement to newly purchase insurance or pay a fine.” The study, The Individual Mandate in Perspective, was conducted using the Urban Institute’s Health Insurance Policy Simulation Model (HIPSM) to estimate the number and share of Americans potentially subject to the mandate, identify their insurance status absent the ACA, and simulate eligibility for Medicaid and exchange-based premium and cost-sharing subsidies.

The results of the Urban Institute analysis estimates the population exempt from the mandate; the population potentially affected by the mandate, but already covered by insurance of some type; and the remaining population required to newly purchase coverage or pay a fine. If the ACA were fully in effect in 2011, the researchers found, 87.4 million nonelderly Americans—33 percent of the population under age 65—would be “explicitly exempt” from the individual responsibility requirement because their incomes fall below the tax filing threshold, the direct premium of the lowest cost available plan exceeds 8 percent of family income, and they are undocumented immigrants. Almost three-quarters of the exempt population already have health insurance coverage of some type today; a little more than one-quarter is uninsured.

Of the remaining 181 million Americans under the age of 65 who are subject to the mandate, 86 percent are estimated to have health insurance without reform. The Urban Institute simulates that 95 percent of those with some type of insurance coverage (employer, nongroup, public) without reform will have the same type of coverage under the ACA. Virtually all of the remaining 5 percent will obtain coverage from a different source under reform than they do today (for example, some of those with nongroup coverage currently will be able to obtain coverage through an employer under the ACA).

Forty-three percent of the population potentially subject to the individual mandate receive coverage through large employers; 12 percent receive coverage through small employers; and 7 percent have employer-based coverage from an undetermined source (most commonly a family member living in another household or a previous employer). Nearly all of these people will continue to obtain their coverage from the same type of source once the reforms are fully in place. Five percent purchase coverage in the nongroup market, and 17 percent have coverage through a public program (for example, Medicaid, Children’s Health Insurance Program (CHIP), military), and nearly all will continue to do so once the reforms are fully in place. Some will have their coverage broadened somewhat so that it satisfies the ACA’s minimum or “essential health benefits” requirements.

Nearly 26.3 million Americans who are currently uninsured will be required to newly obtain coverage or pay a fine. In this group, 8.1 million people will be eligible to receive free or close-to-free insurance through Medicaid or CHIP and can avoid the mandate penalties if they do so. Consequently, 18.2 million Americans (6 percent of the total population, 7 percent of the nonelderly population) will be required to newly purchase coverage or face a penalty. Of that 18.2 million, 10.9 million people will be eligible to receive subsidies toward private insurance premiums in the newly established health insurance exchanges, but will have to make partial contributions toward their coverage. About 7.3 million people—2 percent of the total population (3 percent of the population under age 65)—are not eligible for financial assistance under the ACA and will be subject to penalties if they do not obtain coverage.

The insurance mandate has a positive effect, not only by substantially expanding the number of individuals with insurance, but also by stabilizing the insurance market and related premiums, the report found. “By encouraging the currently insured healthier individuals to stay in these markets and attracting newly insured healthy individuals into them as well, the individual responsibility requirement leads to lower premiums and more stable insurance markets than would be the case without it,” the Urban Institute concluded. “We find that premiums in the nongroup market would be 10 to 20 percent higher on average without the individual coverage requirement.”

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