One of the big questions about the possible Supreme Court ruling on the Affordable Care Act is what would happen if only the individual mandate is struck down, but the rest of the law is left in place. Mainly, is simply providing subsidies enough to encourage new people to buy insurance? Sarah Kliff at Wonkblog seems to think we have very little data on this possibility, but I think she is missing something important. From Kliff:
Whether subsidies would be enough to encourage healthy people to enroll is hard to know, largely because we’ve barely tried it. One study of Massachusetts’s law — where subsidies became available before the mandate kicked in — only saw a big spike in coverage after the mandate came online.
That could be indicative of fewer people signing up — or it could be the same number of enrollees, just migrating into the program at a slower pace. Other insurance expansions, like the Children’s Health Insurance Program, saw enrollment grow slowly year after year, and is still continuing to tick upward.
While there are rarely any perfect analogies, I think our decades old employer-provided health insurance system is a much more relevant example than a few month window during the roll out of the Massachusetts law.
Our employer-provided health insurance system has very high enrollment among those who qualify, even though the system basically uses just subsidies to encourage enrollment.
How it works for most people is that their employer gives them the option to buy insurance with the employer paying much of the cost. If you choose not to get insurance through your employer you are effectively forfeiting this subsidy. Very few employers will give you the option to take the full value of this benefit in cash if you don’t sign up for insurance, so in practice it produces a simple binary choice. Buy subsidized insurance or lose this subsidy. The result over the past several decades is that most people who are given the option to buy subsidized health insurance from their employer end up doing so.
Probably the closest analogy to the ACA exchanges would be the Federal Employee Health Benefit program, which gives federal employees the option of buying subsidized insurance on an exchange. The subsidies alone have proven to be enough to encourage a large percentage of federal employees, including young healthy federal workers, to choose to take part in the system.
While subsidies in the FEHB are structured differently, it is strong evidence that sufficient subsidies alone are capable of encouraging a high level of enrollment in an insurance exchange.