Essay: The Affordable Care Act

The Feared €œPremium Spiralâ€
Critics of the Affordable Care Act have long stated that the law was doomed to failure because it fundamentally changed the way insurance operates. Insurance relies on actuaries to assess risk and offer coverage at rates determined by that assessment. In a free market, pre-existing conditions result in either denial of coverage or prohibitively high premiums because the insurance company is assuming a known health care expense as opposed to insuring risk. Critics of the ACA predicted that by forcing insurance companies to offer health insurance to those with pre-existing conditions a premium spiral would result from the process of adverse selection (Monahan, 2011). In a premium spiral healthy consumers do not purchase or maintain health insurance, leaving health insurance companies to insure a risk pool made up of a disproportionately high number of high cost health care consumers. Insurance companies then must seek premium increases to combat monetary losses caused by paying out more in health care expenses than they are taking in in premium. These premium increases lead to even more healthy individuals declining coverage they feel they do not need. This becomes a repeating pattern with the health insurance risk pool becoming sicker and sicker and premiums becoming higher and higher, thus the term €’premium spiral’ (Sheils & Haught, 2011).
C. Supreme Court Challenge to Individual Mandate
In 2012 a group of business plaintiffs challenged the constitutionality of the ACA’s individual mandate in a case that made it before the United States Supreme Court (“National Federation of Independent Business v. Sebelius,” 2012). The individual mandate was seen as critical to the operation of the ACA, because without it, healthy individuals were unlikely to purchase health insurance until they needed it, at such time the ACA’s guaranteed issue and community rating rules would guarantee their right to purchase affordable insurance (Monahan, 2011). This result would all but ensure a premium spiral.
Writing for the majority, conservative Chief Justice John Roberts held that the ACA’s individual mandate penalty, called a “shared responsibility payment,” operates as a federal tax rather than a penalty (Jost, 2012). Chief Justice Roberts wrote that the ACA does “not make it illegal not to buy health insurance, but instead merely imposes a tax…on failure to do so” (Lambert, 2012).
Critical to the continued function of the ACA, the Court in NFIB also held that the federal government’s attempt to tie all Medicaid funding to expansion of the program was unconstitutional, leaving Medicaid expansion voluntary (Lambert, 2012). Further, the Court held that the reason the individual mandate penalty qualified as a tax as opposed to an impermissible penalty was because it 1) is relatively small in size, 2) does not require intent in order for the tax to be triggered, and 3) is collected by the Internal Revenue Service. Though supporters of the law celebrated the NFIB ruling as a win for the ACA, the opinion actually interfered with the delicate internal workings of the “finely tuned watch” by limiting Medicaid coverage and tying the hands of the federal government in terms of the individual mandate penalty. These changes are potentially catastrophic to the successful operation of the ACA going forward.
D. The Problem following the NFIB Ruling
The major issue with the NFIB ruling is that the ACA has been altered and the Supreme Court has tied the hands of lawmakers in attempting to fix the problem. There is early evidence of a premium spiral as demonstrated by 2016 premium rate increases. The reported average premium increase nationwide for the benchmark second cheapest Silver Plan in 2016 is 7.5% across all states (2016 Marketplace Affordability Snapshot, 2015; Armour, 2015). While this number is only an average of the benchmark plan, many of the upper level plans and co-ops are seeking enormous premium increases or failing under the ACA, something Forbes magazine described as akin to the proverbial “canary in the coal mine” (Laszewski, 2015). In fact, throughout some parts of the country the higher level plans have actually been permitted to increase premiums by double digit percentages for 2015 (Armour, 2015). Premiums are increasing 18.5% for the benchmark plan in West Virginia in 2016 (2016 Marketplace Affordability Snapshot, 2015). Shockingly, Blue Cross and Blue Shield plans sought rate increases of 23% in Illinois, 25% in North Carolina, 31% in Oklahoma, 36% in Tennessee and a whopping 54% in Minnesota (Armour, 2015).
There are also troubling signs for insurance companies. The ACA required that 80% of premium payments to insurance companies be spent toward health care claims, a move ostensibly designed to prevent insurance companies to reap obscene profits on the backs of premium payments (Pear, 2015). However, some insurance companies paid out a full 100% of premiums towards health care claims in 2015, with Blue Cross and Blue Shield of Minnesota, for instance, paying out 115% of collected premiums in health care expenditures (Pear, 2015). Further, the reinsurance program is not functioning as predicted. Insurance companies requested $2.87 billion in reinsurance payments from the risk corridor fund in 2015, but they are only going to receive 12.6% of what they requested in actual payments (The Three Rs: An Overview, 2015). The reinsurance program, designed to be revenue neutral, is actually operating at a $2.5 billion deficit, leaving the Department of Health and Human Services left to seek politically unpopular tax increases to save the reinsurance program, and thus save the flailing private insurance companies (The Three Rs: An Overview, 2015).
The chief reason cited for the high premium increases, failing insurance programs, and bankrupt reinsurance program is the fact that the risk pools are older and sicker than anticipated (Blase, 2015). The goal of the ACA was to comply with the accepted health insurance industry standard of insuring 65% to 75% of eligible individuals in order to secure an adequate risk pool to ensure a sustainable balance between healthy and sick enrollees (Laszewski, 2015; Sanger-Katz, 2015). However, state run ACA exchanges are only averaging around 43% coverage of eligible individuals while the federal exchange is doing even worse at around 38% (Sanger-Katz, 2015). The 2013 Congressional Budget Office estimate was that the ACA would enroll an average of 22 million Americans during 2016 (Laszewski, 2015). However, the Obama Administration claims that the ACA has only enrolled 10 million Americans in ACA insurance exchanges as of the start of open enrollment on November 1, 2015, and predicts that merely 25% of those eligible to sign up but still uninsured will actually enroll during the 2016 open enrollment period (Laszewski, 2015). Thus to make the ACA financially sustainable, it needs to essentially double the number of people signing up for insurance in the ACA exchanges, rather than experience the severe slowdown of enrollment that is actually occurring (Laszewski, 2015).
It would appear that those with a backlog of medical needs due to pre-existing conditions have entered the health insurance market, and the ACA is now struggling to sign up the healthy people needed to balance out the risk pools. In fact, the New York Times reports that many Americans with available “affordable coverage” are rejecting available health insurance and choosing to pay, or at least be assessed, the tax penalty by the Internal Revenue Service (Cowley, 2015). In this past tax year, between 2% and 4%, or a full 7.5 million federal tax returns reported a tax penalty for no mandated health insurance coverage (Cowley, 2015; Erb, 2015).
The stage is now set. The ACA is not enrolling as many individuals as predicted. The insured population is older and sicker than anticipated, causing financial stress on insurance companies and premium increases that exacerbate the problem. Far too many Americans are choosing to forego health insurance and be assessed the tax penalty by the IRS. The challenge now is to increase the percentage of the eligible population that is insured in order to balance out the risk pools, lower premiums, and reverse the trend toward a premium spiral.
II. Policy Alternatives and Evaluation
In many ways, the NFIB decision sowed the seeds of the ACA’s failure. For the ACA to work, insurance companies participating in the state and federal exchanges must remain viable. If these insurance companies are paying out over 100% of premiums in health coverage claims, operating at a loss, seeking massive reinsurance payments, and being denied such payments, then the ACA cannot function as designed. In order to reverse the trend of rising premiums, particularly for the higher level plans, and keep viable choice and competition alive in the exchanges, a higher percentage of eligible consumers simply must purchase health insurance. If more healthy people are paying insurance premiums and not making health care claims, then insurance companies will begin to pay out a smaller percentage of the premiums they are taking in, giving the law a chance at success.
The ACA was designed to use the tax penalty as a financial incentive for healthy consumers to purchase health insurance (Monahan, 2011). In a free health insurance market, a healthy person has an incentive to purchase insurance because if she were to be uninsured and become sick, she would then not be able to purchase affordable health insurance to cover her medical expenses. A healthy person in a free health insurance market thus takes an enormous risk by not purchasing health insurance while healthy, even if she does not believe that she will need it. However, under the ACA, a healthy person could conceivably refuse to purchase health insurance, wait until she became sick, and then sign up for health insurance during the next open enrollment period. Such a scenario repeated on a large scale would flood insurance pools with unhealthy consumers, guaranteeing a premium spiral.
The ACA aims to guard against such a process of “reverse selection” through the penalty enforcing the individual mandate. If an individual is assessed a tax penalty, that money is paid to the government with no benefit gained to the individual. Thus, the tax penalty presumably will nudge individuals to spend their money on an actual product, i.e. health insurance. However, a penalty that is too small may not actually incentivize behavior (Lambert, 2012). The size of the penalty as measured against the cost of compliance determines the strength of the nudge towards purchasing health insurance. As the statistics demonstrate, far too many people are making the choice that paying the ACA tax penalty is a better decision than paying for health insurance they do not believe that they will need.
The concept of the ACA tax penalty was to create a nudge for healthy individuals to purchase health insurance. The nudge for sick individuals to purchase health insurance is obvious and strong. However, healthy people must be convinced that the benefit of maintaining health insurance is worth the difference between the amount of the ACA tax penalty for non-compliance and the premium for minimum coverage (Monahan, 2011). Presumably, the smaller the difference between the tax penalty and the cost of a premium for minimum coverage, the greater the chance that an uninsured individual will actually purchase health insurance. Given the most recent statistics regarding coverage and premiums under the ACA, something must change in order to further incentivize the currently uninsured to purchase health insurance. There are two options. The first involves amending the tax penalty provisions of the ACA to increase the incentive for the uninsured to purchase health insurance. The second involves reforming the ACA mandate to mirror more closely the more successful Massachusetts health insurance mandate.
A. Amend the Provisions of the ACA dealing with the Tax Penalty
One possible solution to the problem of rising health insurance premiums and insufficient numbers of healthy individuals signing up for health insurance is to amend the provisions of the ACA dealing with the tax penalty in order to provide a stronger incentive for the uninsured to purchase health insurance. Lawmakers could merely increase the amount of the penalty, thus strengthening the nudge to purchase health insurance. However, the Supreme Court in NFIB expressly held that one of the reasons the “shared responsibility payment” was a constitutionally permissible tax and not an unconstitutional penalty is because it was relatively small, and in no cases large enough to force behavior (Lambert, 2012). Therefore, lawmakers cannot substantially increase the amount of the tax penalty. Thus increasing the nudge requires increased subsidies in order to bring the out of pocket cost of insurance down to the cost of the penalty rather than bringing the cost of the penalty up to meet the cost of premiums (Lambert, 2012). However, revisions to the ACA’s tax penalty could also strengthen enforcement of the tax and incentivize more people to seek to avoid the tax penalty through compliance with the individual mandate.
1. Increasing Subsidies
Increasing the amount of subsidies is one option to strengthen the nudge to purchase health insurance in compliance with the ACA’s individual mandate. If subsidies are increased, the cost to the consumer for minimum coverage will be lower, bringing it closer to the cost of the tax penalty. When this gap shrinks, individuals will then have less incentive to pay the penalty rather than purchase health insurance. Currently, subsidies are based on the difference between the maximum percentage of income a person is expected to spend on health insurance the premium for an ACA Silver Plan (Monahan, 2011). The percentage of income the ACA expects Americans to spend on health insurance starts at 2% when an individual’s income is 133% of the federal poverty line and progresses until it maxes out at 9.5% when income is 400% of the federal poverty line. After that, there are no subsidies (Monahan, 2011). Despite the fact that subsidies are determined by the cheapest available Silver Plan, the individual may choose to take that subsidy and purchase whatever plan she wishes, meaning she could conceivably save the most money by using the subsidy to purchase the cheapest Bronze Plan.
Decreasing the percentages of income that persons are expected to spend on health insurance would increase subsidies. The obvious benefit of this possibility is that shrinking the gap between compliance and the cost of the tax penalty will shift the nudge for more eligible consumers and incentivize them to purchase health insurance. On the other hand, any adjustment in subsidy sizes will increase the expense of the ACA at a very politically sensitive time. Politically, “sinking more money into subsidies” just when critics say that the ACA is underperforming expectations will be a difficult sell politically.
2. Amending Current ACA Tax Penalty Provisions
Another possibility to increase the nudge for uninsured Americans to purchase health insurance, thus balancing the risk pools and reducing premiums is to amend the current tax provisions of the ACA to provide teeth to the ACA’s individual mandate tax penalty. As the law is currently written, there is no jail time, no property liens, and no wage garnishment for failure to pay the required tax penalty (Erb, 2015). There is essentially no mechanism to enforce payment of an assessed tax penalty under the ACA (Erb, 2015). Statistics outlined above demonstrate that far too many Americans are being assessed the penalty. There are no available numbers on how many Americans are simply ignoring the assessed tax penalty and refusing to pay it. If Americans do not truly have to pay the tax penalty, then it is not effective at nudging consumers toward purchasing health insurance. Providing more teeth to the tax penalty would create a stronger incentive to avoid the penalty by complying with the individual mandate of the ACA.
The Supreme Court was explicitly clear in NFIB that the ACA’s “shared responsibility payment” could not be enforced through jail time for nonpayment, as this would render the “tax” an impermissible penalty by, in effect, criminalizing non-compliance with the individual mandate. However, the Court in NFIB did state that the ACA tax penalty could be collected “by the IRS through the normal means of taxation — except that the Service is not allowed to use those means most suggestive of a punitive sanction, such as criminal prosecution” (Lambert, 2012). Thus, under the language of the Court, only criminal prosecution is off the table to compel payment of the ACA’s tax penalty. Any other means typically used by the IRS to compel payment of federal taxes would seem to be fair game for use in enforcing the ACA’s tax penalties. Namely, amending the tax provisions of the ACA to provide for wage garnishment and property liens for non-payment of the tax penalty seem simple, revenue neutral, ways to increase the nudge to purchase health insurance by strengthening the teeth and impact of the ACA’s tax penalty within the parameters outlined by the Supreme Court. The only possible con to this attempt to increase the nudge towards broader health insurance coverage is that such an amendment would require a great deal of political capital and would likely lead to new legal challenges to test the amendments.
B. Amend the ACA Mandate Provisions to more Closely Resemble Massachusetts
The current structure of the ACA’s individual mandate states that a person must purchase available, affordable health insurance coverage or face a tax penalty equal to the greater of $695 for individuals/$2,085 for families and 2.5% of household income (Monahan, 2011). The tax penalty is capped in that it can never be more than the cost of a Bronze Plan premium (Monahan, 2011). Affordable health insurance is any health insurance who’s out of pocket cost to the consumer is 8% or less of the person’s household income (Monahan, 2011). The nudge to purchase health insurance is actually very inconsistent across income levels. Depending on the average costs of Bronze and Silver Plan premiums, many individuals and families between 250% of the federal poverty level and 400% of the federal poverty level may be exempt from the individual mandate altogether on account of their out of pocket costs for health insurance exceeding 8% of their household income (Monahan, 2011). There are even some middle income wage gaps where a family makes too much money to receive an ACA subsidy but too little money to be considered to have available “affordable health insurance,” meaning that their out of pocket expenses for coverage would exceed 8% of household income (Monahan, 2011). These middle-income families have no nudge whatsoever to purchase health insurance.
An important component to compliance with a tax enforced mandate is the impact of creating a “social norm” regarding the issue (Monahan, 2011). This refers to the degree to which the individual mandate becomes ingrained in the culture of society due to its consistent, understandable, and predictable application among the population. With the way the ACA mandate is currently structured, the nudge to purchase insurance is a complex moving target. As currently structured, lower income Americans pay the highest percentage of their income in the form of an ACA tax penalty because $695 will be greater than 2.5% of income for those Americans (Monahan, 2011). Many middle income Americans are then not subject to the mandate at all, thus pay no penalty. Higher income Americans then are subject to the penalty, with the penalty representing 2.5% of income until capped at the average cost of a Bronze Plan. Once capped, the ACA tax penalty does not increase, even as income increase. At this point, with the tax penalty equaling the cost of a Bronze Plan premium, the nudge is very strong to purchase insurance because the individual is going to pay the amount of the Bronze Plan premium whether she purchases the insurance or not. Thus, she may as well receive something for her money rather than nothing (Monahan, 2011).
The nudge to purchase health insurance is wildly inconsistent across income levels. It starts out very high at low-income levels, drops to nothing at middle income levels, slowly increases again as income rises from the middle, and then peaks when 2.5% of income equals the cost of the average Bronze Plan premium.
The 2006 health care reform in Massachusetts contains a much simpler individual mandate, not tied to income. It has been much more effective at creating compliance. In Massachusetts, as with the ACA, individuals are mandated to purchase health insurance if it is affordable to them (Monahan, 2011). However, in Massachusetts, affordability is a sliding scale based on income and determined by an independent agency. Generally, those on the lower end of the income scale are deemed to be able to devote a much smaller percentage of their income to health insurance premiums than those on the higher end of the income scale (Monahan, 2011). Using this sliding income scaled, Massachusetts is able to reduce the “affordability gap” that exists with the ACA where middle income Americans are not subject to the individual mandate. Further, those subject to the Massachusetts mandate who do not then purchase insurance are penalized exactly one half of the cost of the cheapest available minimum level insurance coverage (Monahan, 2011). This system provides more predictability in the application of the mandate, thus increasing the creation of the social norm tied to the mandate.
The data suggests that the Massachusetts mandate has been much more successful than the ACA mandate at creating compliance and drawing eligible people into the insurance pools. Whereas as many as 4% of federal tax filers were assessed an ACA mandate tax penalty, recent data shows that fewer than 1% of Massachusetts residents were assessed a tax penalty for failure to comply with the Massachusetts state mandate (Erb, 2015; Monahan, 2011).
The benefit of amending the ACA mandate to follow the Massachusetts model is that evidence demonstrates that Massachusetts has been more effective at nudging compliance with the mandate. Further, the Massachusetts mandate shrinks the “unaffordable gap” and avoids the situation where lower income wage earners are subject to the highest tax penalty as represented by a percentage of income, as is the case with the ACA. The cons to this sort of amendment are that researchers are not exactly sure why the Massachusetts nudge is more effective, be it greater financial incentives or more deeply ingrained social norms (Monahan, 2011). Altering the ACA without fully understanding the impact of the Massachusetts law is potentially risky. Further, these sort of reforms will inevitably cause needed changes elsewhere in the ACA given the differences in the operation of subsidies within the Massachusetts law.
III. RECOMMENDATIONS
The Affordable Care Act is such complex law that it creates the impression of being akin to a large, powerful car engine. It may have some slight imperfections, it may stutter and shake now and then, but it will keep running with minor, periodic tune-ups. Unfortunately, this is a false impression. The ACA is much more like that “finely crafted watch” than a large automobile engine. It is complex with many moving parts. However, the internal workings are intricate and interrelated. As a result, the changes made to the ACA by the Supreme Court in the NFIB opinion are significant. By rendering Medicaid expansion optional, the Court effectively removed a small gear from the inside of the “finely tuned watch” sending more of the poorer population into the uninsured and seeking insurance pool. Further, the Court removed a tool out of lawmakers’ toolkit when trying to “tune up the watch.” For these reasons, the NFIB decision may have been a short-term “win” for the government, as opponents of the ACA were attempting to smash the law in one fell swoop, but the Court’s opinion altered the workings and tools of the ACA enough that, without addressing fundamental problems, the ACA will likely fail.
The easiest solution is amending the ACA’s current provisions of the ACA without wholesale changes. The easiest of these is changing the tax provisions of the ACA to allow the Internal Revenue Service to place liens on the property and garnish the wages of those who are assessed a tax penalty for failure to comply with the ACA mandate and do not pay the tax. If the ACA’s tax penalty had the teeth and effect of any other federal tax, the public would be less likely to take the tax penalty lightly or ignore it. The Court’s opinion in NFIB clearly prohibits the ACA from imposing the criminal penalties for failure to pay the tax penalty. Congress may not meaningfully increase the amount of the tax penalties in order to nudge more healthy uninsured people into the market. However, civil asset seizure for failure to pay the Court approved ACA tax penalties as currently structured would be an easy solution that would fit within the parameters of the NFIB decision. There are no known statistics on how many tax filers are being assessed the ACA tax penalty and simply refusing to pay, so the effect of such a solution is unclear.
Along the same lines of altering the parameters of the existing ACA provisions, increasing the size of the subsidies by decreasing the percentages of income expected to be spent on health insurance is likely not the best of the possible solutions. To start, increasing subsidies across the board in this manner would be politically disastrous for the ACA in the current political climate. With the 2016 United States Presidential Election approaching, the topic of “Obamacare” is still hot. Opponents of the ACA would seize upon any cost increase as evidence that the “failed law” is merely seeking to throw more of the nation’s financial resources at the problem in an attempt to save an ill-advised health care overhaul. Further, while increasing the size of subsidies would increase the number of uninsured Americans for whom the nudge to purchase health insurance was overwhelming; it would do nothing to simplify the application of the mandate so as to create a social norm of the type that leads to wider compliance with the law regardless of purely financial considerations. Even with increased subsidies, the ACA would still have an inconsistent application of ACA tax penalties and nudges among income groups. There would still be a sizeable “middle income gap” that would experience no nudge whatsoever.
For these reasons, the best and most substantial solution to the problem of the ACA’s pending premium spiral is to reform the ACA’s individual mandate to function as does the Massachusetts health care reform law of 2006. Massachusetts has delivered a much stronger social norm towards universal coverage by creating an individual mandate that is much more predictable and easily understandable than the ACA mandate. To start, Massachusetts is able to reduce the size of the middle-income affordability gap by using a sliding income scale as determined by an independent governmental agency to determine affordability. Massachusetts then, very simply, ties the mandate tax penalty to the size of the cheapest available premium as opposed to any percentage of income. Tax penalties would still vary some with income as the cheapest available insurance plan premium would vary with income, per the application of the subsidies available. However, measuring the non-compliance tax penalty by premium amount and not a complex income calculation is much easier for the public to understand, and much more consistent in its application across all income levels.
Amending the ACA’s mandate provisions to resemble Massachusetts would not only strengthen the nudge for healthy Americans to purchase health insurance in the short term, but would be much more effective at creating a last social norm in the long term. Massachusetts certainly has the statistics to support its approach. Less than 1% of the eligible population electing to pay the mandate tax penalty is certainly much better than as many as 4% of the eligible population as is occurring with the ACA. Forcing millions more healthy Americans into the health insurance risk pools would immediately boost the amount of money private insurance companies participating in the ACA exchanges would take in in the form of health insurance premiums, allowing the reinsurance risk corridor to turn back towards solvency, and more fully subsidizing the newly insured citizens with pre-existing conditions. Such a scenario would increase the cash flow of more private insurance companies participating in ACA exchanges and begin to lower ACA plan premiums, or at least greatly reduce the rate of expansion. Such a result would slow or reverse the trending premium spiral, leading to even more healthy Americans to enter the insurance pool as the nudge increased and the social norm of universal coverage took hold in the country.
IV. DISCUSSION
Some realities limit the effectiveness of this recommendation. First, both the Affordable Care Act and the Massachusetts 2006 health reform law are large, complex pieces of legislation. Altering the ACA is a large undertaking requiring far more exploration and study than can be contained in a mere 20-page research paper. There are intricacies within the “finely tuned watch” that would be effected by any single change. There are also likely intricacies and differences in the operation of the Massachusetts law that influence the application of its individual mandate and tax penalties. Lawmakers would have to consider all of these factors when amending the ACA as suggested in this paper.
Further, this paper does not address many aspects that effect the application and success of the Affordable Care Act. For instance, this paper touches on the impact of incomplete Medicaid expansion in only a cursory way. However, the fact remains that Medicaid expansion was a crucial component of increasing health insurance coverage under the ACA. With so many states declining to expand Medicaid, this is a major component to the law not functioning as designed.
Finally, we live in a very politically fractured country. Many in the Republican Party invested in the destruction of the ACA for political reasons. Democrats passed the ACA on a party line vote, with no political compromise. On the other side, the Democratic Party is hesitant to acknowledge any failings in the ACA for similar political reasons. After the way the law was constructed and passed with no bipartisan involvement, the Democratic supporters of the law feel they cannot now admit to any mistakes in the way the law is constructed or any problems in the function of the law. For these reasons, getting both sides of the American political isle to negotiate needed fixes and improvements to the Affordable Care Act is a very tenuous political proposition.
V. CONCLUSION
The Affordable Care Act is President Obama’s signature policy achievement. It is ambitious in its goals of insuring nearly all Americans and altering the health care delivery system in the United States. With its various layers and functions, the ACA is truly a “finely crafted watch.” It has survived numerous legal challenges, including a 2012 U.S. Supreme Court decision that altered the force and operation of the law. In the wake of that decision, the long feared premium spiral appears to be inching closer to a reality. Premium statistics from 2016 show the beginning of a premium spiral due to a sicker than expected insurance risk pool. The Supreme Court has altered the operation of the law as well as restricted the actions that lawmakers can take to increase the nudge for young, healthy Americans to purchase health insurance, a necessary measure to guard against a premium spiral.
While the complexity of the ACA and the political climate in the country make any revision to the law a difficult proposition, some policy alternatives would increase the chances of the ACA reversing the premium spiral and increasing its function. Adding teeth and consequences to the ACA’s tax penalty would increase the nudge towards compliance. Further, revising the ACA’s mandate provisions to resemble more closely the Massachusetts health insurance mandate would be a more revenue neutral way to address the current problems with the law. For the ACA to reverse the trend towards a premium spiral, larger numbers and percentages of healthy young Americans must enter the insurance pools. This can be accomplished by increasing the nudge for these Americans to purchase health insurance and by creating more ingrained and sustained social norm towards the universal ownership of health insurance in the United States. Massachusetts has been more effective at both of these goals than has the ACA. While such an amendment would be politically ambitious, such an undertaking is less costly than other policy alternatives. The ACA has been very successful in realizing many of its noble goals. It is worth the effort to reform the law to realize the promise and potential that the ACA had at its inception.
 
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