New York officials announced that insurance premiums would plummet by approximately 50% last week. Multiple factors contribute to the expected decrease in the cost of insurance premiums. However, the principal cause seems to be the implementation of the individual mandate to purchase health insurance under the Affordable Care Act (ACA).
Many years ago, New York passed health insurance reforms that parallel many reforms in the ACA, but did not implement an individual mandate. Thusly, insurance companies were required to accept all applicants, but individuals were not required to purchase insurance. The proportion of sick, insured patients increased, but the pool of payers decreased. Paul Ginsburg, of the Center for Studying Health System Change, a Washington nonprofit, called the situation “a classic case of market failure.” Nonpartisan groups, such as the Congressional Budget Office and The Lewin Group, believe that separating the mandate from the ACA would increase both insurance premiums and the number of uninsured citizens.
Other states should not expect to experience the same decrease in insurance premiums after they implement the individual mandate.
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