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Premiums Would Go Down If Every State Passed Individual Mandates

Researchers find that implementing state-level individual mandates across the U.S. would drop the number of uninsured by nearly four million people by 2022.
Dr. Elizabeth Maziarka reads a blood pressure gauge at the Codman Square Health Center on April 11th, 2006, in Dorchester, Massachusetts.

Since the Republican Party's successful repeal of the tax penalty associated with the Affordable Care Act's individual mandate, states across the country have been experimenting with different strategies for stabilizing their non-group insurance markets, including reinsurance programs and state-level regulations. Several states have either implemented or plan to implement state-level penalties for those who forgo insurance coverage. New Jersey passed just such a law in June; Washington, D.C., and Vermont are planning their own individual mandates.

In a report released today, researchers from the Commonwealth Fund, a health-care advocacy group, estimate what would happen to health-insurance premiums and coverage if every state implemented a state-level individual mandate. They find that, if every state implemented such a mandate, "the number of uninsured would be lower by 3.9 million in 2019 and 7.5 million in 2022." Premiums for plans in the non-group market would, on average, be 11.8 percent lower in 2019.

By and large, the effects of state-level individual mandates would be felt among people higher up the income scale. Among those earning less than 138 percent of the federal poverty line, the share of uninsured non-elderly adults would fall by only 0.7 percentage points—this group is currently eligible for Medicaid in many states so is thus less affected by the premium increases projected to occur as a result of the repeal of the individual mandate. Among those earning between 138 and 400 percent of the federal poverty line, the number of people without insurance would fall by 1.8 million, or about 12.7 percent. (This group is also somewhat insulated from premium increases because they're eligible for subsidies for coverage.) Among those earning more than 400 percent of the federal poverty line, the ranks of the uninsured would decline by 1.5 million, or 33.4 percent.

Due to the particulars of state insurance markets, the effects of state-level mandates would vary quite a bit from state to state. A number of states—Kentucky, Montana, North Dakota, and West Virginia—would see their uninsured rate fall by over 20 percent, in comparison to current law. These states would also see some of the biggest premium declines: Monthly premiums for a 40-year-old adult would decline by 16.7 percent, 11.1 percent, 15.4 percent, and 15.0 percent in Kentucky, Montana, North Dakota, and West Virginia, respectively. Colorado, Nevada, Washington state, New Mexico, and the District of Columbia would see premiums decline by at least 15 percent.

There is, of course, little chance that states like North Dakota pass an individual mandate. Still, the report drives home just how much power states have to stabilize and reduce premiums in their non-group markets. In light of recent and anticipated actions taken by the Trump administration—cuts to navigator funding, the temporary cessation of risk adjustment payments, the recently released rule on association health plans, an expected rule on short-term insurance policies—state policy decisions are increasingly important.