Here’s why Obama won’t delay the individual mandate

September 24, 2013

(Carolyn Kaster / Associated Press)

The White House is no stranger to Obamacare delays. Over the last three years, it has held off on multiple health law provisions as it races to get the Affordable Care Act off the ground.

Don't expect it to happen during this round of budget negotiations.

Congress needs to pass a new continuing resolution to fund the government by Oct. 1 in order to avert a government shutdown. Republicans want to include a one-year delay of Obamacare in that legislation. There's also some discussion of delaying the individual mandate by one year and still allowing the rest of the health care law to go forward. They figure that the Obamacare has already delayed significant parts of the legislation -- why not delay a few more?

But all the delays so far do have one thing in common: They erased political headaches for the law while barely denting the number of people that the health overhaul will cover in 2014. The delays Republicans are asking for now would cause major political and substantive headaches for the law while sharply reducing the number of people it covers.

The Congressional Budget Office estimates that, without an individual mandate, 11 million fewer people would gain coverage next year.

That would happen for two reasons. First, fewer people would buy health insurance coverage without a federal law requiring them to do so. Second, the people who signed up would likely be sicker people, who really thought they would use the coverage. That would cause premiums to spike, making the market a tougher sell for healthy people.

"Clearly the individual mandate is much more of a cornerstone, holding the individual market together," Linda Blumberg, an economist at the Urban Institute, says.

A delay to the individual mandate – or the entire law – would also have a giant ripple effect throughout health-care industries, who have spent the past three years preparing for a 2014 launch. They've spent millions on marketing and outreach, writing business plans that hinge on a significant expansion of the health insurance market next year.

"It's just too late," says Joe Antos, a health policy researcher at the American Enterpise Institute. "Everybody who is involved, insurance companies and hospitals and any other big entity, they're ready to go. They really can't make any changes."

This is especially true for health insurance companies, which decided months ago the prices they would charge consumers on the marketplaces. Those prices assumed that the law would have an individual mandate. Insurers would have likely set different prices if they didn't think the requirement to carry coverage would be in effect.

“The individual mandate is inextricably linked to the ACA’s insurance market reforms," says Robert Zirkelbach, spokesman for America's Health Insurance Plans. "All of the premiums that have been submitted for exchange coverage are based on the individual mandate being in effect. If the coverage requirement were to change, premiums would have to be modified to account for fewer young and healthy people signing up for coverage.”

The individual and employer mandates often get lumped together as similar policies. They do, after all, both have the word mandate in their name – and both require certain entities to buy health insurance coverage. In practice though, they're significantly different. The individual mandate is a lynchpin policy, one that makes the rest of the Affordable Care Act work by bringing millions more people in the health-care system who don't currently buy coverage.

The employer mandate, by contrast, is more of an extra nudge, aimed at encouraging companies to keep doing something they already do right now.

The Congressional Budget Office estimates that with its delay, a half-million fewer people gain coverage in 2014. This has a lot to do with the fact that most big employers already offer insurance right now, with no requirement to do so.

"Repealing the individual mandate would have short-run, immediate consequences that are bad," John McDonough, a professor at the Harvard School of Public Health, says. "The employer mandate has small to moderate adverse consequences. I would prefer to have both implemented, but if I had to pick one from a policy perspective, its easy to say let's absolutely wait on the employer responsibility and keep the individual mandate."

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Brad Plumer · September 24, 2013