Study: Individual mandate repeal may drive California's premiums up but is unlikely to destabilize markets

Affordable Care Act highlighted
California's premiums could go up as a result of the individual mandate repeal. (Getty/Ellenmck)

The rollback of the individual mandate could drive up premiums in California’s insurance exchanges but isn’t likely to fully destabilize that state’s insurance market, according to a new study. 

Researchers led by a team at Massachusetts General Hospital surveyed more than 3,000 people who enrolled in Covered California, the state’s exchange, for 2017 and found 19% said they would not have signed up for insurance if the mandate was not in place.

That would likely drive premiums up by between 4% and 7%, according to the study in Health Affairs. 


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Vicki Fung, Ph.D., on faculty at Mass General's Mongan Institute Health Policy Center and the study’s lead author, told FierceHealthcare that these increases were notable but not enough to completely upend California’s exchanges. 

“That’s certainly not helpful, but it’s certainly not catastrophic,” Fung said. 

RELATED: With $5.7B up for grabs, states look to fill individual mandate void 

That said, California represents a “best case scenario,” the researchers warn, so the impacts could be far more significant in other states. 

Beyond that, Fung said, the survey indicated uneven impacts. For instance, it found that Hispanics, people with low levels of educational attainment and people who had been uninsured a year prior were more likely to say they would drop coverage than their peers. 

Fung said that finding suggests that the mandate repeal could have a more outsized effect on these socioeconomic populations. “It raises concerns about how this policy change could impact disadvantaged and vulnerable groups,” she said. 

In addition, because the survey results apply solely to California, the impacts could be greater in regions with exchanges that are already less stable, such as those with limited participating insurers, the researchers said. 

Fung said that the mandate rollback, coupled with cuts in funding to navigator services and a shortened enrollment window could “exacerbate” coverage losses in these areas. 

RELATED: State experiments with restoring the individual mandate include a health plan ‘down payment’ 

There are bright spots, however, Fung said. Enrollment data for 2019, which was released by the Centers for Medicare & Medicaid Services last week, indicates that coverage losses were not as steep as the researchers estimated, with about 4% of people nationwide dropping insurance. 

As the surveyed enrollees were asked directly if they would sign up again in a hypothetical scenario, before the mandate repeal was finalized, so the variance can be attributed to several factors, she said, including a lack of knowledge about policy changes and the penalty itself. 

Fung said it’s crucial for policy researchers to keep a close eye on how the mandate repeal impacts the vulnerable groups identified in the study. 

“I think it will be important to assess who didn’t enroll this year, not just with respect to risk level, but with some of these sociodemographic characteristics that might make people vulnerable,” she said.

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