What the ACA individual mandate repeal means and what comes next

After debating for the better part of a year over how to repeal and replace the Affordable Care Act (ACA), Congress finally passed a tax law in December 2017 that eliminated the individual mandate for healthcare coverage. The mandate, effective in 2019, was only one aspect of the ACA, but its impact may be significant for enrollment and costs going forward.

The idea behind the individual mandate was that healthy individuals would be grouped in healthcare coverage pools, along with those who may have more serious, chronic health issues. The combination of providing coverage for those who do not visit their physicians very often, or at all, with covering the healthcare costs of the more infirm would help insurance providers balance their overall costs.

Unfortunately, the first people to leave the healthcare exchange when they are no longer required to participate are those healthy individuals. The number of uninsured individuals has already increased by 3.2 million people by the end of 2017. Fewer healthy people in the pool drives up the cost of providing healthcare coverage for everyone that remains.

When their costs increase, insurance companies then tend to pull out of the healthcare exchanges. As the Washington Post points out, this trend generally happens “in places where there aren’t wide swaths of insured Americans — such as rural areas in Iowa or New Hampshire.” And when insurance companies pull out of the exchanges in those areas, the law is weakened further.

Another option for those healthy individuals who choose not to participate in the ACA, if they work for themselves or for very small businesses, is to join an association health plan. Looser regulations on these associations have been proposed. However, critics say they “fear they would promote substandard coverage and weaken the ACA’s already fragile insurance marketplaces.”

Fewer choices and higher premiums, as healthy people and major insurers leave the healthcare exchange, could become the norm for healthcare under the ACA through at least the near future.