Sunday, November 27, 2011

Will Loss Of the Individual Mandate Torpedo the Affordable Care Act?

While the Disease Management Care Blog has had more than its share of doubts about the Affordable Care Act, it ultimately agreed that the "individual health insurance mandate" may be a necessary - if perilously unconstitutional - requirement.  Conventional wisdom says that unless everyone buys into the system, healthy persons will forgo the expense of insurance. That means only the sick will pay for insurance that ultimately cannot cover the collective cost of their illness. That will lead to a rapidly escalating prices, otherwise known as a "death spiral."

And that's why, now that the mandate has been taken up by the Supreme Court, Obamacare's supporters fear that striking the mandate could unravel everything.

Which is why the DMCB found this "don't worry, be happy" analysis by Lewin Group's John Sheils and Randall Haught very interesting. They say Obamacare can still succeed without the mandate.

Based on complicated economic modeling using a mix of inputs, methods and assumptions, they found, in contrast to the widely quoted Congressional Budget Office's mix of inputs, methods and assumptions, that

1) many persons without health insurance would take advantage of the ACA's generous premium subsidies, and

2) an open enrollment window limited to one month a year would blunt the impact of persons "gaming" health insurance by only enrolling when they're sick. 

While insurance would not be universal, the Lewin authors estimate that between 21 and 24 million Americans who were previously uninsured would become insured.  While premiums could increase by 12.6%, the premium subsidies would help put the word "affordable" in the ACA. 

To further buttress their argument, they point out that in 1993 New York State required its health insurers to accept all applicants regardless of health status.  Despite many dire predictions, there was no spiral and no documented loss of coverage.

What can the DMCB conclude after reading this?  It's easy: no one really knows what is going to happen in 2014 with or without the mandate

It looks like there is only way to find out.

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