September 24, 2013 -- A new report from the Urban Institute shows that a one-year delay in the Affordable Care Act’s (ACA) individual mandate would result in far-reaching effects, including decreased insurance coverage, increased premiums, increased financial risk for hospitals, and a need to re-establish already approved premiums for plans inside and outside the exchanges.
In addition to millions more going uninsured than under full implementation of the ACA, a one-year delay would alter the makeup of people purchasing insurance and result in adverse selection—or disproportionately more unhealthy than healthy people buying insurance—causing a need for insurers to increase premiums, and potentially creating political pressure to repeal the law’s consumer protections.
While the Congressional Budget Office estimates federal savings of about $35 billion over 10 years from a one-year delay, this does not take into account ongoing state and private spending on increased uncompensated care due to larger numbers of uninsured people. Uncompensated care is care that is delivered, but not paid for by either a patient or a third-party payer; a large share of these costs is ultimately financed by state and federal governments. In addition, since federal reductions to funding for uncompensated care through the Medicare program will occur as part of the ACA regardless of a delay, increasing the number of uninsured to unanticipated levels would leave hospitals particularly financially vulnerable.
“Unlike delaying the employer mandate, postponing the individual mandate would start a domino effect with consequences ranging from millions more people without insurance to those who do purchase insurance having to pay much higher prices,” said Linda Blumberg, a senior fellow at the Urban Institute. “The disruptions and pressures that would be created by a delay could lead us back to square one with people being denied coverage based on what conditions they have and plans not covering all the necessary services.”
The study also found that delaying the individual mandate would impact small group and nongroup insurance markets both inside and outside the new insurance exchanges as already-approved premiums are contingent upon the presence of the ACA’s individual mandate.
