Many people on social media claim ACA premiums went high because Republican’s ended the ACA Individual mandate by a vote in 2019 – taking effect for 2020-year policies.
Some claimed this prevented adverse selection pre-2020 – but that 2020 onward, only the healthy bought policies, and therefore premiums had to go up because the risk pool would hold sicker persons needing health care.
But that is not what happened.
ACA premiums doubled between year 1 (2014) and 2017-2018.
The ACA itself had an exemption to the mandate – if the cheapest Bronze policy exceeded just over 8% of your annual income, you were exempt from the mandate.
ACA policy premiums shot up so fast that nearly everyone over 30-40, with kids, or married couples in their 50s and up were already exempt per the ACA’s own rules, written into the law.
Starting in 2020 onward, the annual price increases for ACA policies became LESS than during the mandate! The growth rate in monthly premium prices actually slowed down!
Did the ACA Individual Mandate Matter?
📊 The Individual Mandate’s Intended Role
- The mandate was designed to pull healthy people into the risk pool, balancing costs from sicker enrollees.
- Economists (including Jonathan Gruber) argued that without it, adverse selection would worsen and premiums would rise faster.
⚖️ What Happened in Practice
- Exemptions diluted the mandate:
- If the cheapest Bronze plan exceeded ~8% of income, you were exempt.
- By 2017–2018, premiums were high enough that many people qualified for exemptions, making the mandate less binding.
- Premium trajectory:
- Premiums rose sharply between 2014–2018, doubling in many markets.
- After the mandate penalty was reduced to $0 in 2019, premiums did not spike further — in fact, premium growth slowed.
- Why growth slowed post‑2019:
- Federal subsidies capped costs for many enrollees.
- Insurers adjusted pricing after the chaotic early years.
- Risk pools stabilized somewhat, even without the mandate penalty.
🔎 Interpretation
- The mandate mattered early on, when premiums were lower and exemptions fewer.
- By the time premiums had doubled, the mandate was functionally weak — many were exempt, and subsidies shielded others.
- Ending the penalty in 2019 had little additional effect, because the market had already adapted and the de facto exemptions were widespread.
The mandate was meant to be the key holding ACA marketplace together. But as premiums inflated, the symbolic value of the mandate eroded — it existed on paper, but in practice most people were exempt or unaffected.
Bottom line
- The individual mandate had some effect early, but by 2017–2018 rising premiums made many exempt.
- Ending the penalty in 2019 did not cause a major premium surge, because the mandate was already weakened.
- The ACA’s premium growth problem was driven more by underlying medical costs and insurer dynamics than by the mandate’s presence or absence.
