The Effect of the Affordable Care Act on Enrollment and Premiums, With and Without the Individual Mandate

by Christine Eibner, Carter C. Price

View related products

Download Free Electronic Document

FormatFile SizeNotes
PDF file 0.5 MB

Use Adobe Acrobat Reader version 7.0 or higher for the best experience.

Research Questions

  1. How would removing the individual mandate from the Affordable Care Act (ACA) affect the number of insured individuals, premium costs for those who are insured through the exchanges, and government spending on health coverage?

Abstract

This report describes the results of an analysis using RAND's COMPARE (Comprehensive Assessment of Reform Efforts) microsimulation model to predict the effects of a possible Supreme Court decision invalidating the individual mandate provision in the Patient Protection and Affordable Care Act of 2010 while keeping the other parts of the law intact. The authors predict the effects of such a decision on health insurance coverage overall and for subgroups based on income. They also estimate where people will obtain insurance in scenarios with and without the mandate and how the elimination of the individual mandate will affect insurance premiums.

The analysis predicted that, if the individual mandate were to be eliminated: (1) 12.5 million people who would have otherwise signed up for coverage will be uninsured. (2) Premium prices in the non-group market will increase by 2.4 percent. (3) Total government spending will increase modestly, from $394 billion to $404 billion in 2016. (4) The amount of government spending per newly insured individual will more than double, from $3,659 to $7,468. The study estimates a smaller effect on premiums than comparable studies because the RAND team uses a method that accounts for the difference in the age composition of enrollees with and without the mandate.

Key Findings

If the ACA Is Implemented Without the Individual Mandate, 12.5 Million More People Will Be Uninsured and Government Spending Will Increase

  • 12.5 million people who would have otherwise signed up for coverage will be uninsured.
  • Premium prices will increase by 2.4 percent.
  • Total government spending will increase modestly, from $394 billion to $404 billion in 2016.
  • The amount of government spending per newly insured individual will more than double, from $3,659 to $7,468.

RAND's Model Accounts for Age Differences in the Enrollment Pool

  • The study estimates a smaller effect on premiums than comparable studies because the RAND team uses a method that accounts for the difference in the age composition of enrollees with and without the mandate.

Research conducted by

The research described in this report was performed under the auspices of RAND Health.

This report is part of the RAND Corporation technical report series. RAND technical reports may include research findings on a specific topic that is limited in scope or intended for a narrow audience; present discussions of the methodology employed in research; provide literature reviews, survey instruments, modeling exercises, guidelines for practitioners and research professionals, and supporting documentation; or deliver preliminary findings. All RAND reports undergo rigorous peer review to ensure that they meet high standards for research quality and objectivity.

Permission is given to duplicate this electronic document for personal use only, as long as it is unaltered and complete. Copies may not be duplicated for commercial purposes. Unauthorized posting of RAND PDFs to a non-RAND Web site is prohibited. RAND PDFs are protected under copyright law. For information on reprint and linking permissions, please visit the RAND Permissions page.

The RAND Corporation is a nonprofit institution that helps improve policy and decisionmaking through research and analysis. RAND's publications do not necessarily reflect the opinions of its research clients and sponsors.