States May Impose Their Own Health Insurance Individual Mandates

States May Impose Their Own Health Insurance Individual Mandates

Although Republican efforts to repeal and replace the Affordable Care Act petered out last year without producing a bill, one of the key provisions of the law—the individual mandate—was effectively gutted in the Tax Cuts and Jobs Act passed by both houses of Congress in December. The tax reform package zeroed out the tax penalty imposed on Americans who fail to maintain continuous health insurance coverage throughout the year, rendering the requirement moot.

The effective repeal of the individual mandate undermines the ACA’s core principle of holding down health insurance costs by expanding the risk pool, raising fears of an upward spiral in premiums as healthy individuals exit the individual insurance market. In the wake of the mandate’s rollback, however, several states are considering imposing their own requirements that residents obtain health insurance, Lisa Nagele-Piazza reports at SHRM:

Massachusetts has already had an individual mandate in effect since 2007. “Massachusetts largely served as the model for the ACA,” explained Jeffrey Herman, an attorney with Greensfelder, Hemker & Gale in St. Louis.

More states may follow suit. Maryland lawmakers recently introduced a bill that would impose penalties on the uninsured in the state. And an individual mandate is also being informally advocated for or considered by state legislators or representatives of insurance exchanges in a number of other states, including California, Connecticut, Minnesota, Rhode Island and Vermont, Herman said.

Adam Solander, an attorney with Epstein Becker & Green in Washington, DC, tells Nagele-Piazza that he expects many states, particularly “blue states” with Democratic legislatures, to explore individual coverage mandates in the coming year.

While the rollback of the individual mandate did not directly affect employer-sponsored health insurance, it could lead to fewer employees enrolling in coverage through their employer, to insurers raising premiums for both individual and group health insurance buyers, or to health care providers raising prices to cover the cost of treating a larger number of uninsured patients. The ACA’s employer mandate, which requires businesses with 50 or more full-time equivalent employees to offer coverage to all full-time employees, remains in effect nationwide.

The emergence of state-level mandates is in keeping with a trend we’ve seen since the beginning of the Trump administration, in which states and cities with more liberal governments have been seeking to counteract deregulation at the federal level with laws within their jurisdictions. This in turn has caused complaints among multi-state employers who have to navigate an increasingly varied patchwork of rules.