Individual mandate repeal could boost California's ACA premiums; states mull their own solutions

The rollback of the individual mandate is likely to increase premiums in ACA exchanges and lead to fewer Californians with insurance, according to a new study. The results were released as some states weigh options to implement their own insurance mandates, efforts that have largely stalled. 

The study, led by researchers at Harvard and published in Health Affairs, estimated that 378,000 people in California would leave the individual marketplaces, including about 250,000 that receive coverage through the state's Affordable Care Act exchange, Covered California. 

The research team surveyed about 3,000 adult enrollees in California's individual markets, and 18% said they would have skipped insurance coverage in 2017 if not for the individual mandate's tax penalty, though a significant number of low-risk enrollees said they would still have purchased coverage without the penalty.

Based on those responses, the researchers estimated that eliminating the mandate could boost premiums by 7% in California. 

The estimates are in line with nationwide predictions from the Congressional Budget Office, according to the study. CBO projected that the individual mandate repeal will lead to 14 million fewer insured people over the next decade. It also estimated that premiums in the ACA exchanges could increase by as much as 10% per year over that period. 

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The study doesn't account for other potential disruptions to the ACA marketplaces, like the Trump administration's plan to expand the enrollment period for short-term coverage, that could have more significantly negative impacts on the risk pool, and thus on costs. 

The estimates for California represent a "best case scenario," the researchers said, as other states have faced more upheaval and instability in their ACA exchanges. 

“The impact in many other states, however, is likely to be far worse," Peter V. Lee, executive director of Covered California, said in a statement. 

"The removal of the penalty in those states will be compounded by the absence of effective marketing and the prospect of new skimpy insurance products, which would cause healthier people to leave the individual market."

Because of the potential downsides of the individual mandate repeal, some states are pursuing insurance mandates of their own on the state level. California was widely expected to be one of the leaders in this movement but thus far has not introduced any legislation to put a mandate in place, Governing reported.  

Democrats in Maryland became the first state officials to pursue a state-level insurance mandate, proposing a plan that would levy a fine on people who fail to enroll in coverage, but would then use that money as a "down payment" toward insurance on the state's exchanges. 

"We're presenting folks with the opportunity to make a rational economic decision," said state Sen. Brian Feldman. 

RELATED: What health insurance executives think of the GOP's plan to repeal the individual mandate 

Other states looking into mandates include Hawaii, New Jersey, Washington and the District of Columbia, according to the Governing article. However, there could be political downsides for lawmakers who forge ahead with those plans, which is stalling progress. 

A Kaiser Family Foundation tracking poll last fall found that 55% of voters supported the mandate repeal, which it has been consistently unpopular. 

"The individual mandate provision has been the most unpopular provision of the ACA, even in blue states," Sabrina Corlette, research professor at Georgetown University's Center on Health Insurance Reforms, told Governing. "So there are political risks to enacting one."