Resurrecting Obamacare’s most hated provision

Since Congress effectively ended the unpopular requirement that all Americans obtain health coverage by zeroing out the fine for noncompliance as of the first of this year, three states and the District of Columbia have enacted mandates of their own. The mandate that Massachusetts imposed in 2006 is now back in force. And at least seven other states are considering similar measures.

If they succeed, one-quarter of the U.S. population will again have to choose between paying for costly insurance that’s of little value to them — and a burdensome fine.

Rather than resurrect Obamacare’s most hated provision, blue-state politicians should focus on making insurance more affordable for their constituents.
It’s hard to conclude that Obamacare’s individual mandate was anything but a failure. In 2017, three years after the mandate went into effect, more than 27 million people went without coverage.

They opted not to purchase coverage largely because it was too expensive. Between 2013 — the year before most of Obamacare’s rules went into effect — and 2017, average annual individual health insurance premiums doubled, from $2,784 to $5,712.

Those rate increases should’ve been obvious, in hindsight. Obamacare’s litany of rules practically order insurers to raise premiums. The law requires insurers to sell health insurance to everyone regardless of their current health status or demographic risk. They can’t charge sick patients more than healthy ones. And they can’t charge the old any more than three times what they charge the young — even though claims costs for the old tend to be five times those of the young.

To cover the cost of caring for the sick, insurance companies had to raise rates across the board.

Obamacare also requires all plans to cover 10 “essential health benefits.” Some people may not want or need some of the benefits — like maternity and pediatric care. But providing comprehensive coverage is expensive for insurers — and they’ve ratcheted up rates accordingly.

Obamacare’s supporters hoped the mandate would draw relatively young and healthy people into the insurance pool to help offset the cost of caring for the aged and infirm. But many people — in the neighborhood of 6 million — chose to pay the fine for being uninsured.

A surprising number of them, about 80 percent, made less than $50,000 a year. For these folks, expensive Obamacare coverage just wasn’t worth its high cost. Blue-state leaders have learned nothing from all this recent history. New Jersey, Vermont and the District of Columbia have all re-imposed individual mandates on their residents. California Gov. Gavin Newsom has proposed doing the same, as have both chambers of the state legislature. In Maryland, a bill that would reinstate the mandate has more than 80 cosponsors. Connecticut, Hawaii, Minnesota, Rhode Island and Washington are all considering re-imposing the mandate, too.

If their residents wanted expensive Obamacare-approved coverage, they’d buy it. A new mandate doesn’t address their core concern — affordability.
Fortunately, the Trump administration is taking that concern seriously by expanding access to short-term health plans. These policies don’t have to comply with Obamacare’s cost-inflating rules and regulations. They can last up to a year, and insurers can renew them for up to three years.

Consequently, they’re much cheaper. Premiums for short-term plans average about $124 a month — 70 percent less than the unsubsidized cost of a plan for sale on one of Obamacare’s exchanges.
Several blue states have derided these affordable short-term plans as “junk insurance” — and limit or ban their sale. The House Energy and Commerce Committee’s Democratic leaders, meanwhile, just announced an investigation into the plans and companies, alleging that the insurers and brokers that sell short-term policies are misleading consumers.

Americans have rejected Obamacare’s coercive, one-size-fits-all approach. They want more affordable health insurance, not more mandates. Unfortunately, if they live in a blue state, their leaders aren’t interested in helping them.

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

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