Wendy Netter Epstein
Faculty Director and Professor of Law
In “Private Law Alternatives to the Individual Mandate,” forthcoming in the Minnesota Law Review, Professor Epstein considers how to prompt younger, healthier individuals to buy health insurance. While there is excitement on the left about a move to universal health care, even the most optimistic concede that such a change is years away. Meanwhile, millions of Americans are uninsured—a problem made worse by the recent repeal of the individual mandate penalty.
The penalty was supposed to reduce the number of uninsured, and it did to a degree. But while other mechanisms to prompt insurance purchase remain in place (like the premium tax credits), the repeal of the mandate penalty means that healthy people can now
wait to buy insurance until they get sick. The number of (healthy) uninsured will rise, leaving insurers to cover a sicker risk pool. Insurers will undoubtedly respond by raising premiums.
But it is not only the mandate repeal that contributes to the uninsured problem. Even when the mandate was enforced, millions of Americans still lacked coverage, leading to worse health outcomes and adverse spillover effects for the rest of the population that ultimately bears the cost of uncompensated care.
Professor Epstein’s article tackles the uninsured problem by looking to private law mechanisms to prompt insurance uptake, particularly of the coveted young and healthy population. It considers both neoclassical economic theory and principles of behavioral economics to better understand what motivates (and deters) the purchase of health insurance. It then explores economic incentives and “nudges” that encourage healthy individuals to sign up for policies without forcing them to do so.
For example, Professor Epstein suggests co-opting practices previously deployed for nefarious purposes to prompt behavior that policy now seeks, such as offering low introductory rates, long-term contracts, and limited exit rights. Other options include the sale of return of premium-style policies or policies with a generosity frame, simplified plan offerings, or automatic enrollment of the uninsured with a right to opt-out. These solutions—many of which would not require congressional action—hold the promise of increasing insurance uptake and lowering premiums without removing choice or requiring substantial government action.
For further discussion, see Wendy Netter Epstein, Private Law Alternatives to the Individual Mandate, 104 Minn. L. Rev. __ (2020).