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4 States Are Restoring the Individual Mandate to Buy Health Insurance

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4 States Are Restoring the Individual Mandate to Buy Health Insurance

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Updated: November 9, 2018    Published: June 20, 2018

2 one-way signs for states with individual mandate choice | HealthCare.com

What Is the Individual Mandate?

Starting in 2014, the Affordable Care Act (Obamacare) required all Americans to join a health insurance plan or pay a big tax penalty. Since this controversial law is a mandate, or requirement, for every person, it’s also known as the individual mandate.

The National Individual Mandate Disappears In 2019

Earlier this year, Congress passed a tax law repealing the individual mandate. This means that you will no longer have to pay a fine to the federal government if you choose to go without health insurance, starting in 2019. However, the Affordable Care Act and its many patient protections will continue to stand.

States With Their Own Individual Mandate…

states with individual mandate | HealthCare.com

  • the District of Columbia,
  • Massachusetts,
  • New Jersey, and
  • Vermont (Vermont’s mandate was not passed in time for 2019, and will begin in 2020).

Currently, the 4 states above have passed laws that locally restore a health insurance mandate. Even though the federal government no longer requires you to buy health insurance, residents of these states must continue to stay on a health plan of their choice.

…and States Considering An Individual Mandate

While 4 states have already decided on a legal requirement, others are in the midst of considering, drafting, and passing their own version of the individual mandate. Though all states are considering an individual mandate in some capacity, residents of these states are more likely to face a penalty if they do not have health insurance at some point after 2019.

  • California,
  • Connecticut,
  • Hawaii,
  • Maryland,
  • Minnesota
  • Rhode Island, and
  • Washington.

Each state is at different stages in implementing an individual mandate. They are facing unique obstacles in attempts to improve the legislation and promote well-being for the state’s residents and economy. Their efforts have brought matters of healthcare from the federal government to state politics.

Why Are States Passing New Individual Mandate Laws?

Representatives from these states have explained that laws for individual mandate are designed to address not only a public healthcare concern but also the financial aftermath of the repeal. Premiums on individual market policies have been predicted to increase by 25 percent in 2019. From the patient to the provider, effects from the tax penalty elimination will change the healthcare system.

The individual market would descend into a death spiral if not for this (individual mandate) legislation. - Joe Vitale, NJ state senator Click To Tweet

Stability in the market continues to be a major priority for states with their own mandates. Massachusetts, New Jersey, and Vermont are preemptively avoiding the inflation of monthly insurance premiums for residents after the national repeal takes effect. New state bills regarding the individual mandate resemble the federal policy’s on tax penalty and exemptions.

How the Repeal May Affect the Healthcare System: The Affordable Care Act established a federal minimum standard for health insurance, encouraging Americans to purchase coverage. With the elimination of the federal individual mandate, some people who are young or in good health may stop carrying health insurance. The Congressional Budget Office has estimated that 13 million people nationwide will go uninsured without the individual mandate.

If individuals only enroll in health insurance when they fall ill, premium costs will increase for everyone, causing even fewer people to buy insurance. Analysts refer to this possible chain of events as the Obamacare “death spiral”.

The Politics of the Tax Penalty

The Obamacare penalty has been politically divisive since its creation. Republicans generally argue that the law puts lower-income individuals at a financial disadvantage. Democrats typically insist that the mandate encourages all individuals – healthy or sick – to carry health insurance. National debate on the individual mandate continues to revolve around one word: constitutionality.

The repeal of the tax penalty in January was met with support from conservatives. However, some states – mostly Democratic – did not share the same reaction, acting to propose their own individual mandates.

Where Does Tax Penalty Money Go? In 2015, roughly 6.5 million Americans paid an average of $470 in tax penalties for not carrying health insurance. A common question from individuals is where money from the tax penalty ends up. From ACA subsidies to Medicare, this money is continuously invested back into healthcare spending for federal and state insurance programs.

The Future of American Health Insurance

Remember that the bill to eliminate the tax penalty does not go into effect until 2019. If you go without health insurance in 2018, you may still face consequences. For the past 2 years, the tax penalty for not carrying health insurance has been $695 per person or 2.5 percent of your total household income, whichever is greater.

You may be concerned about the effect of the repeal on your health insurance. Those with chronic illnesses, such as diabetes, cancer, and asthma, will likely have to continue on a health insurance plan no matter what.

Because the Affordable Care Act itself has not been repealed, insurance companies will continue to offer their existing plans. This ensures a degree of stability in the health insurance marketplace. Yet without the individual mandate, it will once again be a matter of personal responsibility to enroll in health insurance.

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  1. Evan Koehn says:

    Nice, informative article. I feel that some wording feels left-leaning though – For instance, “These states are not actively considering an individual mandate yet.” The word “yet” seems to imply that someday these states will come to their senses and bring this back.

  2. James says:

    I’m surprised at the bias in this article and the lack of explaining the unfairness of the cost allocation of the ACA. The ACA places the health care cost on each adult and child regardless of income, except for the very poor. The ACA protects the rich from being burdened with taking care of the very sick.

    Before the ACA a family of 4 could buy the equivalent of the ACA Bronze plan for about 700 a month. Under the ACA plan it cost 2,800 a month in 2018. The actual cost varies by state and county, but it is roughly 1000 per adult and 400 per child. In comparison with other cost a family can face, in essence the ACA is like doubling to tripling a family’s rent each month.

    The very rich pay the same amount as everyone else. The winners of the ACA are those with lots of money and those with little money.

    The only good thing from the ACA is the coverage of pre-existing conditions. This feature is very expensive. The rich didn’t want to pay so they demanded the cost be placed on each person, not the rich.

    Another really bad thing about the ACA is it completely ignores good health choices other than smoking. People who exercise and eat healthy pay the same premium as everyone else.

    To fix the ACA health choices need to affect the premium and the cost burden needs to be allocated much more by ability-to-pay instead of each person pays the same amount.

  3. Mary says:

    When people retire before medicare kicks in maybe companies should offer insurance through their health plans to buy, for those few years. (it could be a retirement benifit) In a bigger company large group premiums are cheaper and would be even cheaper if added in retires. Some companies are good enough to cover you until medicare kicks in. But many don’t.
    So having an affordable insurance through an employer until medicare would be great!

  4. Jim says:

    Monthly premiums and deductible levels have gone through the roof. Even those who are making a decent wage are finding it hard to justify the costs. Mine was already too high and they want to increase it by $12 a month. The way it’s set up you’d have to have something catastrophic happen before you’d see a dime in benefits. And that’s after paying a deductible off that equals your total yearly premiums. This is money draining scam. It’s no wonder people are dropping it. Changes need to be made.

  5. Deborah C Thomas says:

    I do not go to doctors and for years have paid for health insurance that is not used. Being forced to pay for health insurance by the government when I don’t go to a doctor or use the health insurance because of my personal beliefs is extremely unfair. I am a single older woman living with a low income and cannot afford the plans offered. My current employer chooses not to provide health insurance to his employees. I have to pay almost $1000 for not having health insurance in 2016 and part of 2017, in addition to income taxes. I am not a fan of Obamacare and believe it is unfair to Americans who are stuck in the middle — make too much to get assistance and too little to pay for health insurance.

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