Rand Study: Without Individual Mandate, Individual Premiums Would Increase Only 2.4%

If the Patient Protection and Affordable Care Act's individual mandate is eliminated, insurance coverage would drop, but individuals' premiums would increase only slightly, according to a Rand Corporation study.

The study, "The Effect of the Affordable Care Act on Enrollment and Premiums, With and Without the Individual Mandate," showed that slashing the requirement to have health insurance would decrease the predicted number of Americans covered under the PPACA in 2016 from 27 million to 15 million. An individual's cost of insurance would increase only 2.4 percent, however, according to the study. This estimation is significantly lower than a recent study by the Robert Wood Johnson Foundation that predicted premiums could increase 10-25 percent.

Rand's projected small increase is due to the difference in insurance costs based on age. Under the PPACA, older people can be charged as much as three times more than younger people for health insurance. Without the individual mandate, most people who would forgo health insurance would be younger, healthier individuals, leaving the insurance exchanges with a disproportionate amount of older people who have higher premiums. The average individual's cost would thus see only a slight increase.

The overall average premium increase for all people using the exchanges, however, would be 9.3 percent. As most of those buying policies without the mandate would be older Americans who have more expensive policies, the overall price of insurance would increase, reflecting the low amount of younger policy holders who have less expensive insurance.

Related Articles on the Individual Mandate:

In Massachusetts, "The Sky Did Not Fall" Under Individual Mandate
States, Independent Business Group File Arguments Against Individual Mandate

Health Premiums Could Jump 25% if Individual Mandate is Axed, Study Says

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