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What Will Happen to Health Insurance Now?

As you may have heard, our country is poised to undergo many changes via the new income tax laws. One such change is the elimination of the Individual Mandate penalty, also known as the Shared Responsibility Payment. Technically, the penalty is not gone, but was set at zero dollars for future years.

Essentially, the payment serves as reinforcement for the Individual Mandate part of the Affordable Care Act; most American taxpayers are required to enroll in a health insurance policy, or else face the fee when they file their income tax returns. Without a meaningful penalty, experts caution that many people might be tempted to drop their coverage. Primarily, this would be younger, healthier people, who are willing to face the risk of serious illness or injury rather than pay health insurance premiums.

Obviously, we have no way of predicting the future, and no way to know for certain how many will drop out of the health insurance marketplace. This change could bring about a minor, barely noticeable impact… Or, theoretically, the loss of enough individuals from the market could cause premiums to rise.

Lawmakers in individuals states, particularly those operating their own exchanges (like California) are eyeing this issue carefully. Up to 1.7 million Californians fall into that category of people who might choose to abstain from health insurance coverage.

One possibility is a state mandate, that would basically replace the now defunct federal-level mandate.  Such a law would require a two-thirds majority for passage via the state legislature. It’s possible, but only Massachusetts has so far been able to enact such legislation.

Another scenario might involve such a mandate, but paired with additional financial incentives in the form of subsidies to help younger, healthier individuals and families retain their coverage. This measure would encourage greater participation in the marketplace, theoretically helping to keep premiums manageable for everyone.

Rest assured that California lawmakers began looking at these possible solutions long before the Shared Responsibility Payment was even eliminated.  Nothing has been decided yet, but we will continue to keep you informed of any changes to our statewide health insurance system.