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CBO: PPACA Mandate May Cut Nongroup Rates 15%

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Getting rid of the Patient Protection and Affordable Care Act (PPACA) individual health insurance mandate could decrease the federal budget deficit while also decreasing the number of uninsured U.S. residents who get health coverage as a result of PPACA.

Jessica Banthin, a senior advisor at the Congressinal Budget Office (CBO), gave that assessment at a meeting focusing on the individual mandate that was organized by RAND Corp., Santa Monica, Calif.

The U.S. Supreme Court is set to start hearing oral arguments on the constitutionality of the mandate March 29. If the mandate survives, it will require many individuals with incomes over a certain level to have health coverage or else pay a penalty.

Defenders of the provision say it is necessary because doctors and hospitals have no ethical or legal right to turn away patients who need care and may prove to be unable to pay their bills, and because people who do have health coverage end up paying the medical bills of “free riders” by paying higher fees to doctors and hospitals and higher premiums to health insurers.

Opponents of the provision say Congress has no more right to make people buy a commercial insurance product than it does to make people buy broccoli.

Banthin, who focused on CBO analysts’ views on the economic effects of the mandate, said the analysts believe eliminating the mandate would mean that less healthy individuals would be more likely to pay for health insurance than healthier individuals.

The antiselection pressure could increase individual and family market premiums by about 15% to 20%, Banthin said.

By 2021, insurers of all kinds could end up with 16 million fewer enrollees than they would have had if the mandate were in place, Banthin said.

The lack of a mandate could cut employer group plan enrollment by 4 million, individual and family coverage coverage use by 6 million, and Medicaid enrollment by 6 million, Banthin said.

The government could lose $27 billion in individual mandate penalties from 2012 to 2021, but it could save about $309 billion. The government could collect $80 billion in additional tax revenue and spend about $149 billion less on Medicaid costs and exchange subsidies, Banthin said.


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