Killing the Individual Mandate Will Probably Kill Obamacare

Does the individual mandate work? CBO estimates that if it’s repealed, 13 million fewer people will buy insurance. That’s something like two-thirds of all Obamacare enrollees, which means that CBO thinks it has an enormous impact. Without it, Obamacare collapses.

A few weeks ago I linked to a study of traffic fines that suggested the CBO estimate was at least plausible. But that’s all it did. Today, though, Matt Fiedler—formerly chief economist of Obama’s CEA and currently a Brookings fellow—presented some evidence about the mandate that was much more on point. He looks solely at people whose income is above 400 percent of the poverty level, which means they don’t qualify for federal subsidies. If they didn’t buy insurance before Obamacare, the only reason they have to buy it now is the mandate penalty. So did they?

Starting in 2014, when the mandate took effect, the number of uninsured in this group dropped by a third. As a check, nothing happened in Massachusetts, which already had a mandate.

This is strong evidence that the mandate works. These people receive no subsidies, so there was really nothing that made insurance more attractive to them when Obamacare went into effect. They started buying it because they didn’t want to pay the fine, even though they made enough money that the fine wasn’t that big a deal. For poorer people, it makes sense that the mandate penalty would have an even greater effect. When you’re poor, you really can’t afford to pay this kind of penalty, especially when you qualify for subsidies and might as well spend the money on something useful instead.

I’m still not sure that killing the mandate would cause two-thirds of Obamacare customers to drop out, but it might. And it sure looks likely that at least half would drop out. Either way, Obamacare would be toast.

And we probably won’t have to wait long to find out. If the mandate is eliminated, it doesn’t really matter whether CBO is right or wrong. All that matters is whether insurance companies think CBO is right. If they do, we won’t have to linger around for a death spiral to kill Obamacare. Insurers will just exit the market en masse, and that will be that. 

ONE MORE QUICK THING:

Or at least we hope. It’s fall fundraising time, and we’re trying to raise $250,000 to help fund Mother Jones’ journalism during a shorter than normal three-week push.

If you’re reading this, a fundraising pitch at the bottom of an article, you must find our team’s reporting valuable and we hope you’ll consider supporting it with a donation of any amount right now if you can.

It’s really that simple. But if you’d like to read a bit more, our membership lead, Brian Hiatt, has a post for you highlighting some of our newsroom's impressive, impactful work of late—including two big investigations in just one day and covering voting rights the way it needs to be done—that we hope you'll agree is worth supporting.

payment methods

ONE MORE QUICK THING:

Or at least we hope. It’s fall fundraising time, and we’re trying to raise $250,000 to help fund Mother Jones’ journalism during a shorter than normal three-week push.

If you’re reading this, a fundraising pitch at the bottom of an article, you must find our team’s reporting valuable and we hope you’ll consider supporting it with a donation of any amount right now if you can.

It’s really that simple. But if you’d like to read a bit more, our membership lead, Brian Hiatt, has a post for you highlighting some of our newsroom's impressive, impactful work of late—including two big investigations in just one day and covering voting rights the way it needs to be done—that we hope you’ll agree is worth supporting.

payment methods

We Recommend

Latest

Sign up for our free newsletter

Subscribe to the Mother Jones Daily to have our top stories delivered directly to your inbox.

Get our award-winning magazine

Save big on a full year of investigations, ideas, and insights.

Subscribe

Support our journalism

Help Mother Jones' reporters dig deep with a tax-deductible donation.

Donate