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Study: Ending Individual Mandate Would Not Hike Insurance Prices Sharply

Eliminating the health care reform requirement that all Americans must have health insurance would not dramatically increase the
cost of policies offered through new insurance exchanges, according to a study released today by Santa Monica-based RAND Corp.

The U.S. Supreme Court is preparing to hear arguments in March regarding the constitutionality of the so-called individual mandate, a key provision of 2010’s Affordable Care Act.

According to RAND, the number of Americans expected to get coverage in 2016 under the law would drop from 27 million to 15 million if the individual mandate were eliminated.

Despite that drop, the study estimates that eliminating the mandate would increase an individual’s cost of buying insurance through the individual exchanges by just 2.4 percent.

Under health care reform, exchanges will be established to provide policies to individuals who do not have work-based coverage and those who work for small employers, the study said. If the mandate is eliminated, there is concern that the exchanges would suffer from “adverse selection” as only sicker, higher-risk adults would sign up for coverage. That, in turn, could drive up insurance premiums.

But the RAND study is more optimistic about price effects than other research groups.

“Our analysis suggests eliminating the individual mandate would sharply decrease coverage, but it would not send premiums into a `death spiral’ that would make health insurance unaffordable to those who do not qualify for government subsidies,” said Christine Eibner, the study’s lead author and an economist at RAND.