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State individual mandates: Hows and whys

Editor's Note:

This analysis is part of the USC-Brookings Schaeffer Initiative for Health Policy, which is a partnership between the Center for Health Policy at Brookings and the University of Southern California Schaeffer Center for Health Policy & Economics. The Initiative aims to inform the national health care debate with rigorous, evidence-based analysis leading to practical recommendations using the collaborative strengths of USC and Brookings.

On December 22, 2017, President Trump signed major tax legislation that eliminated the penalties associated with the Affordable Care Act’s individual mandate, effectively repealing the requirement that most Americans maintain qualifying health coverage. Repealing the mandate, also referred to as the individual shared responsibility provision, is expected to lead to substantially higher individual-market health insurance premiums and rates of uninsurance. The tax law makes mandate repeal effective after 2018. With open enrollment for 2019 coverage set to begin November 1, states are considering whether and how to respond.

In “State individual mandates,” Jason Levitis offers the possible solution of enacting a mandate at the state level. Levitis led ACA implementation at the U.S. Treasury Department until January 2017 and currently advises states on health care issues, including the development of state-level mandates.

Levitis notes that state mandates are a straightforward way to avert the negative consequences of federal mandate repeal at the state level. They can also help discourage the spread of substandard insurance coverage, facilitate state outreach to the uninsured, and serve as a source of revenue to finance other state policies aimed at improving insurance markets. Massachusetts enacted its own individual mandate in 2006 as part of the state’s major health insurance reform. More recently, New Jersey, the District of Columbia (D.C.), and Vermont have each enacted mandate legislation.

The key elements of mandate legislation are: (1) the coverage that qualifies; (2) the amount of penalties for not maintaining coverage; and (3) the exemptions available. States must also consider administrative mechanisms to collect mandate penalties and grant exemptions, and reporting requirements to support compliance.

The paper explains that the Affordable Care Act and the Massachusetts law took similar but slightly different approaches to each of these elements. Levitis suggests that states adopt the federal model as a baseline to provide continuity for stakeholders and simplify implementation, as New Jersey and D.C. have done.  He explains key changes to adapt the federal law for state legislation.  He also describes and analyzes policy options for modifying the federal rules, including incorporating elements of the Massachusetts law.

Read the full paper here.


Jason Levitis is a Nonresident Senior Fellow at Yale Law School’s Solomon Center for Health Law and Policy. He is also a principal at Levitis Strategies LLC, where he provides technical assistance and strategic advice on the ACA’s tax provisions, state innovation waivers, tax administration, and regulatory process to state officials nationwide through his work at Princeton University’s State Health and Value Strategies project. The author did not receive financial support from any firm or person for this article or from any firm or person with a financial or political interest in this article. He is currently not an officer, director, or board member of any organization with an interest in this article.

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