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The Individual Mandate is Too Weak
Posted at 10 a.m. on Sept. 21, 2012
A new study from the Congressional Budget Office on the individual mandate portion of President Obama’s health care reform law finds that “about 6 million people will pay a penalty because they are uninsured in 2016…and that total collections will be about $7 billion in 2016 and average about $8 billion per year over the 2017–2022 period.”
Avik Roy argues that this underscores a fatal flaw in the mandate: “The point of the individual mandate is to mitigate the effects of adverse selection. Obamacare forces insurers to take all comers, even if they’re already ill, incentivizing Americans to wait until they’re sick to buy health insurance. As a result, the law contains an individual mandate, forcing nearly all Americans to buy health insurance, or pay a fine… More and more people—especially young, healthy people—will choose to pay the $695 fine instead of spending 10 times that on health insurance. As they do, the individual mandate will fail in its central purpose.”