Jan 14, 2020 - Health

The ACA is doing fine without a mandate penalty

Photo: Samuel Corum/Anadolu Agency/Getty Images

The Affordable Care Act’s insurance market has not been materially affected by the elimination of the individual mandate penalty — undercutting a key argument in the lawsuit urging the courts to strike down the health care law.

The big picture: Healthy enrollees have not left the market in droves, premiums have not spiked and there has been no market death spiral.

Details: Premiums spiked in earlier years, as insurers figured out the market and anticipated the elimination of the penalty, but are declining by an average of 2-3% in 2020.

  • Healthy people do not appear to have fled the market. ACA enrollees spent fewer days in the hospital in 2019 than in the previous four years.
  • The financial health of insurers participating in the ACA marketplaces is stable, and dramatically improved since the early years of the ACA. 
  • Other elements of the ACA, such as the Medicaid expansion, appear to have been largely unaffected by the elimination of the penalty.

Flashback: ACA historians will remember that many critics of the mandate believed the penalty was too weak to drive the healthy into the marketplaces from the start.

  • And real-world experience has shown that premium subsidies have been more important than the mandate penalty.

There are still well-documented problems in the individual market. 

  • Policies are unaffordable for many people who do not receive subsidies. Deductibles are very high (averaging $4,544 per person for a “benchmark” plan).
  • And insurer participation in some rural areas remains fragile.    

But these problems existed with the mandate penalty in effect.  

  • Experience on the ground has demonstrated that the marketplaces and the larger ACA continue to function, even when “severed” from the mandate penalty.

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Pete Stark, former congressman who helped draft the ACA, dies

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Former Rep. Pete Stark (D-Calif.) has died, his family confirmed in a statement Saturday. He was 88.

Why it matters: Per AP, during his 40-year congressional career, Stark, who died Friday, helped draft the Affordable Care Act. He played a major role in the 1986 Consolidated Omnibus Budget Reconciliation Act, or COBRA, which "allows people to stay on their employers’ insurance after leaving a job," the Washington Post notes.

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Where it stands: The court has already said that employers must be able to get an exemption from the contraception mandate if they have a religious objection to the policy. Broadly, the question the court is taking up now is whether the Trump administration has been too permissive with those exemptions. The court will likely rule in early summer.

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The Supreme Court said Monday that it won't speed up a lawsuit that aims to strike down the entire Affordable Care Act. The law's defenders had asked the high court to step in earlier than usual, but the justices opted to let the normal appeals process run its course instead.

Why it matters: This unsurprising move all but ensures that the court won't decide the ACA's fate until after the 2020 presidential election. If the justices ultimately do strike down all or part of the health care law, President Trump won't have to answer for the ensuing disruption during a campaign — and it could end up being his successor's mess to clean up.

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