Many conservatives and now apparently some Democrats are pressing to delay the individual mandate for a year in response to the chaotic roll out of the new online health insurance marketplaces (a.k.a. exchanges).

A few observations:

• Considerable uncertainty exists about the extent to which the mandate will encourage previously uninsured, younger and healthier people to sign up for coverage, especially in view of the relatively small penalties for not signing up for 2014.  But delaying the mandate would certainly lead to some reduction in younger/healthier take-up of coverage, with some increase in the average costs of covering people who sign up, and it would amplify the already high degree of uncertainty about the magnitude of take-up and claim costs.
• Insurance companies approved for providing coverage through the exchanges developed their medical cost projections and premiums under the assumption that the mandate would be in effect.  They were pressed vigorously by the federal and some state governments for low premium rates, which led some companies to withdraw or stay away.
• Delaying the mandate would lead to some increase in insurers’ costs of providing coverage in relation to their projected claim costs and agreed premium rates.
• Rational insurance company executives, whether of for-profit or not-for-profit entities, might wish to reprice coverage if the mandate were delayed, which hardly seems feasible, or perhaps consider withdrawing from the exchanges, assuming that would be legal.  Threatening to withdraw would be politically risky.  The insurers (or shareholders of for-profit entities) might have to take one for the team.
• There might be more than meets the eye to the President’s meeting with health insurance executives.

Here’s the link to my Forbes post.

Here’s the link to my post on Forbes.