The Effect of Eliminating the Individual Mandate Penalty and the Role of Behavioral Factors

Published in: The Commonwealth Fund [Epub July 2018]

by Christine Eibner, Sarah A. Nowak

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The Affordable Care Act's individual mandate requires most Americans to enroll in health insurance. In 2017, Congress eliminated financial penalties associated with failing to comply with the mandate, which becomes effective in 2019.


To review the evidence for how individual mandates affect enrollment decisions, and to assess the effect of eliminating the penalty on enrollment, premiums, and the federal deficit.


We reviewed the literature on health insurance mandates and conducted analysis using the RAND COMPARE microsimulation model.

Findings and Conclusions

Consumers' responses to mandates may be influenced by nonfinancial factors that are difficult to measure, including a desire to comply with the law, beliefs about enforcement, and inertia in decision-making. Under a range of scenarios that reflect alternative assumptions about responses to these factors, we find that enrollment falls by 2.8 million to 13 million people and premiums for bronze plans increase by 3 percent to 13 percent when the mandate penalty is removed. The impact on the federal budget deficit is more uncertain, with effects ranging from a reduction of $8 billion to an increase of $3.6 billion in 2020. The effect on the deficit depends on how enrollees who are eligible for tax credits and Medicaid—those who have little financial reason to drop coverage—respond to the penalty's elimination.

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