The Affordable Care Act's Two-Legged Stool: The Effects of Eliminating the Federal Individual Mandate on Health Insurance Coverage

Abstract

In 2019, the Trump administration eliminated the federal individual mandate, a policy deemed necessary to maintain the functionality of the Affordable Care Act. I exploit the fact that some states maintained their own mandates in order to explore the effects of the federal mandate being lifted on health insurance enrollment. In theory, I expect for younger, healthier individuals and those with lower incomes—intrinsically tied to certain racial demographics with high uninsured rates—to have dropped coverage more in states without their own mandates, which could lead to increased adverse selection. Employing a difference-in-differences design, I find that while coverage has declined in general, the elimination of the mandate had a negligible effect on overall insurance levels in the year immediately after the policy change. However, the policy appeared to have a small, negative effect on insurance coverage for individuals partially subsidized on the exchanges and Asians, which may translate into poorer health outcomes for people in these demographic groups in the future.