Amanda Starc
KELLOGG SCHOOL OF MANAGEMENT, NORTHWESTERN UNIVERSITY. Associate Professor of Strategy. Research interests include industrial organization and health economics.
Health Care: The Role of the Individual Mandate and Insurance Subsidies

Health Care: The Role of the Individual Mandate and Insurance Subsidies

The Issue:

Health insurance pools risk across consumers. If only sick people buy insurance, coverage costs will be high. The Affordable Care Act offered carrots (subsidies) and sticks (a tax penalty for those who do not get coverage) to entice healthy people to buy insurance.

The Facts:

  • The individual mandate, one of the most contentious and unpopular aspects of the Affordable Care Act, imposes a tax penalty on people who don’t obtain health coverage..
  • The people most impacted by the mandate are those who buy insurance through the individual market. Most people in the U.S. are covered through employer-sponsored health insurance or by Medicaid and Medicare.
  • The American Health Care Act proposed by House Republicans would offer less generous subsidies on average and eliminate the individual mandate, adding instead a provision that would impose a surcharge to those who let their coverage lapse.