The individual mandate obligates people to obtain health insurance or pay penalties. As such, the low and middle-income earners who qualify for Medicaid are expected to purchase subsidized insurance coverage. Those who fail to secure coverage are liable for tax penalties unless they qualify for the varied exceptions. People who are exempted include undocumented immigrants and those with low incomes thus unable to file tax returns. The intention of imposing penalties is to increase the number of insured individuals to boost insurance risk pool.
The mandate requiring people to enroll for health insurance currently does not apply at the federal level. However, some states, such as Massachusetts, New Jersey, Vermont, California, and Rhode Island still impose tax penalty. The penalty is assigned at the rate of 695 and 347.50 dollars per adult and child respectively (Frean et al., 2017). Additionally, Frean et al. (2017) reveal that penalty is charged up to a maximum of 2,085 per family or a 2.5 percent of the income. The penalty is charged on the highest amount between the maximum per family and the percentage of the income.
Many uninsured people live in states that have repealed the mandate meaning that they do not impose penalties for failing to make health insurance payments. Therefore, the lack of insurance prevents them from accessing quality health services impacting negatively on their overall health and well-being. The uninsured have to contend with poor health care outcomes as they are less likely to obtain medical services like blood pressure test, cholesterol checks, and cancer screening thus risking their health (Jeffery, 2015). As mentioned, the imposition of penalties increases the number of people enrolling for healthcare insurance improving the insurance risk pool. It is reported that the coverage rate have reached as high as 97.5 percent in Massachusetts because of the mandate (Wettstein, 2018). The increase in insurance risk pool avails enough financial resources to provide quality health services.
Since its enactment, the Affordable Care Act (ACT) has improved health outcomes through incentives and penalties. The mandate is an example of provision envisaged in ACA meant to increase the number of people enrolling for health insurance. The mandate increases the insurance pool keeping people healthier through access to quality care.
Frean, M., Gruber, J. & Sommers, B. (2017). Premium subsidies, the mandate, and Medicaid expansion: Coverage effects of the Affordable Care Act. Journal of Health Economics, 53, 72–86.
Jeffery, C. (2015). Regulatory redistribution in the market for health insurance. American Economic Journal: Applied Economics, 7(2), 109-134.
Wettstein, G. (2018). The Affordable Care Act’s Insurance market regulations’ effect on coverage. Health Economics, 27(3), 454–464.