Does the Individual Mandate Work?

This chart sits at the middle of a big controversy:

This is CBO’s estimate of how many people would skip buying health insurance if the individual mandate were repealed. Within two years, 12 million people would drop out, and they’d do it because the tax penalty for non-insurance went away: “In CBO and JCT’s estimation, with no penalty at all, only a small number of people who enroll in insurance because of the mandate under current law would continue to do so solely because of a willingness to comply with the law.”

Right now, the penalty is either $695 or 2.5 percent of your income. Very few people have a penalty greater than $1,500, while the cost of insurance is many times that. Is this really enough to motivate so many people to comply with the law? Republicans tend to think this is ridiculous, but both CBO and JCT have stuck to their guns on the mandate for years—and they aren’t staffed with idiots. Unfortunately, CBO is not in the business of explaining its methodology, so we have no way of knowing what this is based on.

But maybe we can take a crack at it ourselves by looking at other areas where individuals are fined for not obeying the law. Traffic offenses seem like a promising avenue of investigation, but there aren’t too many studies of how traffic fines correlate with breaking the law. However, a few years ago a study got released based on an increase in speeding fines in the Netherlands. It was especially noteworthy because the increase in fines could be checked against actual speeding, thanks to automated speed-measuring systems. The study’s conclusion is that fines have only a small effect: “If the fine increases by 1%, then the offence rate detected by an ASMS will decline by 0.14%.”

In the case of Obamacare, the penalty increased from zero, so we don’t have a percentage increase to work with. But let’s assume that for the average person this feels like a tripling of the fine. In that case, we’d expect a 28 percent decline in the offense rate. The total number of people uninsured before Obamacare took effect was about 45 million, which we can take as the starting “offense” rate. So that suggests the mandate was responsible for about 12-13 million people getting insurance.

There’s obviously a lot of guesswork here, since we don’t have a true baseline to work with. Nor do we know if the response to the mandate is similar to the response to speeding fines. Nonetheless, it gives us a ballpark kind of estimate, which matches up surprisingly well with CBO’s estimate. Apparently the individual mandate really does work.

NOTE: For what it’s worth, I did the arithmetic on this as I was writing the post. I didn’t know beforehand how it would turn out. Needless to say, I’d be interested in seeing similar correlations from other relevant studies.

UPDATE: This post originally contained a footnote about Adjusted Gross Income on your tax return, but it was wrong and didn’t really impact anything else very much. So I’ve deleted it.

FOLLOW THE MONEY

Corporations and billionaires don’t fund journalism like ours that exists to shake things up. Instead, support from readers allows Mother Jones to call it like it is without fear, favor, or false equivalence.

And right now, a longtime friend of Mother Jones has pledged an incredibly generous gift to inspire—and double—giving from online readers. That's huge! Because you can see that our fall fundraising drive is well behind the $325,000 we need to raise. So if you agree that in-depth, fiercely independent journalism matters right now, please support our work and help us raise the money it takes to keep Mother Jones charging hard. Your gift, and all online donations up to $94,000 total, will be matched and go twice as far—but only until the November 9 deadline.

$400,000 to go: Please help us pick up the pace!

payment methods

FOLLOW THE MONEY

Corporations and billionaires don’t fund journalism like ours that exists to shake things up. Instead, support from readers allows Mother Jones to call it like it is without fear, favor, or false equivalence.

And right now, a longtime friend of Mother Jones has pledged an incredibly generous gift to inspire—and double—giving from online readers. That's huge! Because you can see that our fall fundraising drive is well behind the $325,000 we need to raise. So if you agree that in-depth, fiercely independent journalism matters right now, please support our work and help us raise the money it takes to keep Mother Jones charging hard. Your gift, and all online donations up $94,000 total, will be matched and go twice as far—but only until the November 9 deadline.

$400,000 to go: Please help us pick up the pace!

payment methods

We Recommend

Latest

Sign up for our free newsletter

Subscribe to the Mother Jones Daily to have our top stories delivered directly to your inbox.

Get our award-winning magazine

Save big on a full year of investigations, ideas, and insights.

Subscribe

Support our journalism

Help Mother Jones' reporters dig deep with a tax-deductible donation.

Donate