Under the Affordable Care Act, people must buy health insurance or pay a financial penalty. Framing that policy as a mandate to buy health insurance versus as a tax on not purchasing health insurance can matter.
In Ericson and Kessler (JEBO 2016), we describe the results of a year-long experiment in which a series of participants reported their probability of purchasing health insurance either under a mandate or a financially equivalent tax.
In late 2011 and early 2012, articulating the policy as a mandate, rather than a financially equivalent tax, increased probability of insurance purchase by 10.6 percentage points — an effect comparable to a $1000 decrease in annual premiums. However, the controversy over the Affordable Care Act’s insurance mandate provision that changed the political discourse during the year 2012. We document the rise of this controversy. After the controversy, the mandate is no more effective than the tax.
For more, see:
- Our NBER Working Paper 18913, “The Articulation Effect of Government Policy: Health Insurance Mandates Versus Taxes”
- Coverage in the Washington Post’s Wonkblog: “It’s a mandate! It’s a tax!“
Keith Marzilli Ericson 