The Pros and Cons of Pushing Back the Individual Mandate

The bumpy rollout of the Affordable Care Act’s insurance marketplaces has left many Americans looking to get coverage and the insurance companies providing the plans confused, and some lawmakers have called on the White House to push back the enrollment deadline, but a delay could have a ripple effect throughout the implementation of the law.

Devon Herrick, senior analyst at the National Center for Policy Analysis, says there are rumors around Capitol Hill that the administration is considering a rollback of the mandate that currently requires Americans to be insured by March 31, 2014, but even if there is a delay, it would likely be a “soft” rollback.

“This would mean the administration likely wouldn’t enforce it quite as much, or there wouldn’t be penalties for short gaps in coverage,” Herrick says. As it stands now, consumers without coverage will have to pay a fine of $95 or 1% of their annual income in 2014 if they opt not to enroll.

In July, the White House announced it pushed back the employer mandate portion of the Affordable Care Act to 2015 from 2014 to give businesses more time to comply.

The more trouble individuals have with actually enrolling in a health plan, the less enforced action there would likely be, Herrick says.

Here’s a breakdown of the possible impact—both good and bad—of rolling back the enforcement date for the individual mandate.

The Pros of a Rollback

Delaying the sign-up deadline would give the government more time to work out the kinks on and allow users to become more familiar with the site and find the best plan that fits their needs, experts say.

Herrick says now that the site’s traffic has likely waned since the hype surrounding its launch has dissipated, the system can probably better handle the amounts of people trying to enroll.

“If millions of people on day one flocked there, there’s no system that could handle that kind of traffic,” he says. “From an infrastructure standpoint, [less people] makes things more doable.”

Yevgeniy Feyman, Manhattan Institute scholar, also says insurers will have more assurance that the premiums they have entered in for the exchanges are representative of those who are signing up. The administration says it wants to enroll seven million people in the first year of the exchange rollout, 2.7 million of which are young and healthy to help offset the costs. But if errors and glitches persist on the website, getting there may prove difficult, he says.

“You don’t want a lot of people paying the $95 penalty, so giving people more opportunities and time to sign up is a definite pro for the law.”

The Cons of a Rollback

Controversy has surrounded the implementation of the president’s signature legislation since it was first introduced, and while Feyman says the rollout has brought a lot of negative headlines, it won’t bring an end to the reform.

“It does weaken the law in some respect. It’s delay after delay,” he says. “More stories that Republicans can weave around the law to say it is doing poorly, if the core of the law had to be delayed.”

Premium pricing can also be skewed with a postponement, says Herrick. Right now, premium prices have been set according to the projected number of both young and healthy and older and potentially less healthy enrollees. Delaying the mandate means younger people may wait until later to sign up, or choose not to enroll at all, Herrick says.

“As an economist, I can assume that the people with the most expensive health-care needs: the oldest and sickest, would be spending thousands out of pocket on health care and are the ones with the most demand for the product,” he says. “Younger people, if they get a break or are told they can wait three months, they may do that. You can’t run a risk pool with the sickest people jumping in on day one, and the healthiest on day 90.”