A new study published by the Urban Institute this week finds that removing the employer mandate from the Affordable Care Act will have little impact on either insurance coverage or government spending–but that removing the individual-mandate provision would significantly increase the number of uninsured individuals and affect government spending.
The study comes on the heels of the Obama administration’s decision to delay the employer mandate–and just before House Speaker John Boehner holds a vote to delay both the employer mandate and the individual mandate.
*Full implementation of all ACA policies, including all states eventually opting in to Medicaid expansion; assumption does not affect relative differences across policy options.
The Urban Institute study says delaying both provisions would be a significant blow to the uninsured, arguing that while the employer mandate is not critical to coverage objectives of the ACA, the individual mandate is. According to the study results–shown in the graph above–eliminating the employer mandate would increase the rate of non-elderly uninsured individuals by just one-tenth of a percentage point, from 10.1 percent under full ACA implementation to 10.2 percent.
Getting rid of the individual mandate, however, would increase the percentage of uninsured to 15.1 percent, leaving an additional 13.7 million people without insurance, the study says. This is because most employers who would be required to provide insurance coverage under the employer mandate do so already; the largest incentive to offer coverage is to retain the top employees, who may pursue other opportunities if coverage is not available through their employer. Without the individual mandate, though, younger and healthier individuals could decline to buy insurance, thereby increasing the number of uninsured and leading to higher premium prices and to instability in the market.
The employer-mandate delay would also have a limited impact on government spending, resulting in only a 1 percent decrease in premiums and subsidies paid through exchanges, mirroring the 1 percent decrease in exchange-based insurance coverage. The only significant difference would be the loss of revenue from employer penalties, which would total about $3.7 billion, the study says. Absent the individual mandate, lower enrollment would result in a $6.2 billion decrease in Medicaid spending and a decrease in spending on small-employer subsidies of around $300 million. Lack of individual-mandate penalties would decrease government revenue by about $3.5 billion, compared with full ACA implementation.
The study challenges the recent GOP rhetoric that delaying the employer but not the individual mandate is harmful to Americans. Both bills to delay the mandates are expected to pass in the House and be disregarded in the Senate.