A win for the individual mandate

Health reform’s individual mandate does not get a lot of love. The mandate - which requires most Americans to purchase health insurance come 2014 - polls horribly, is thought by many to be unconstitutional and, from a policy perspective, often derided as too weak to actually prod us into buying coverage.

But, today, there’s some new evidence that health reform’s individual mandate will be a powerful policy tool. Seventy-six percent of the uninsured say they would rather purchase insurance than pay the law’s penalty.

That number comes from Oliver Wyman, a consulting firm that has put together the first major market survey of the uninsured, looking at who will buy coverage under the health reform law. When asked to choose between paying a penalty and purchasing coverage, 76 percent of the uninsured said they’d rather purchase coverage. That would reduce the number of people without insurance to 5 percent of the population and have 25 million Americans purchasing through the exchanges, just slightly higher than the 24 million that the CBO projected.

This is surprising and it isn’t. On the one hand, health reform’s penalty for not purchasing health insurance - which will rise to $695 by 2016 - is a lot less than the cost of buying health insurance coverage. But on the other, Massachusetts - the only state that has implemented an individual mandate - has seen very high take up.

One other interesting finding to point out here: those with the lowest incomes turned out to be the most likely to comply with the mandate:

The health reform law includes higher subsidies for those with lower incomes. So who decides to purchase insurance will have a big impact on how much the federal government spends on implementing the Affordable Care Act. And any changes to subsidies that Congress makes, Oliver Wyman’s Terry Stone says, will likely matter most to the lowest income Americans.

“In today’s political and economic climate, we can expect pressure to reduce subsidies,” says Stone, a partner with the firm’s Health and Life Sciences practice. “If that happens we’re likely to see more people go without insurance—and unable to purchase coverage on their own. And the group most affected will not be the poorest, but middle-income Americans.”