Using a sophisticated model based on economic theory, the researchers looked at the likely effects eliminating the law’s and tax credits and tinkering with other provisions of the law, to see how they would affect the propensity of young adults to buy insurance coverage.
The ACA’s tax credits and subsidies offer a “carrot” to encourage enrollment by young and healthy individuals who might otherwise remain uninsured, the researchers noted, while the individual mandate acts as a “stick” by penalizing those who do not enroll.
The authors of the study found that “eliminating the ACA’s tax credits and eliminating the individual mandate both increase premiums and reduce the individual market.” In addition, “these key features of the help to protect against adverse selection and stabilize the market by encouraging healthy people to enroll.”
They also found that premiums in the individual market “are only modestly sensitive to young adults’ propensity to enroll in insurance coverage,” and that the individual market would be stable regardless of the share of enrollees made up by young adults.