CBO: Individual Mandate Repeal Would Undo Historic Health Coverage Gains

As part of budget reconciliation legislation that may move in coming weeks, House Republican leaders are likely to include a repeal of health reform’s requirement, known as the individual mandate, that most individuals have insurance or pay a penalty.  That would reverse much of the historic progress the nation has made — and will continue to make — in reducing the ranks of the uninsured.

The uninsured rate fell sharply by 2.9 percentage points and the number of uninsured Americans dropped by 8.8 million between 2013 and 2014, according to new Census Bureau data.  These are by far the largest single-year reductions on record in data back to 1987, driven primarily by health reform’s major coverage expansions that first took effect last year.  Moreover, other government and private surveys find further substantial reductions in the share and number of uninsured in 2015. 

Repealing the individual mandate would undo much of that progress.  The Congressional Budget Office (CBO) estimates that repealing the individual mandate would:

• Increase the number of uninsured by 14 million in 2025, relative to current law.  Without the individual mandate, many fewer people would enroll in job-based coverage, subsidized private coverage through health reform’s marketplaces, Medicaid, the Children’s Health Insurance Program, or other sources of coverage.  CBO expects that in 2025, there would be nearly 52 percent more people (41 million) without health insurance than under current law (27 million).
• Raise premiums by 20 percent for coverage purchased through the individual market inside and outside the marketplaces in all years between 2017 and 2025.  Without the individual mandate, healthier people would be those most likely to drop or otherwise go without coverage.  Losing healthy people from the risk pool would push up individual market premiums for everyone else by making those still enrolled sicker and costlier to cover, on average.  Higher premiums, in turn, would push more healthy people out of the pool over time, driving up premiums still further.

These CBO estimates are consistent with its prior estimates and also with recently updated estimates from RAND, which projects that repealing the individual mandate would increase the number of uninsured by 12.3 million and raise individual market premiums in 2017.  Earlier analyses from the Urban Institute and the Lewin Group produced similar results.