Mandates and the Affordability of Health Care
This paper examines the economic rationale of affordability exemptions in the context of a health insurance mandate. On its face, an affordability exemption makes little sense-- it exempts people from purchasing a good that policymakers believe benefits them. I provide an economic definition of affordability and discuss how it is implemented in the contexts of food, housing, and health care. Affordability standards are frequently used in food and housing policy making, but both empirically and theoretically health care operates quite differently than do these other merit goods. These differences help explain why the use of affordability in health policymaking is so different from its use in these other contexts. I conclude with a discussion of the relationship between mandates and exemptions in other health care systems.
This research was funded by the Economic Research Initiative on the Uninsured, Robert Wood Johnson Foundation. The views expressed herein are those of the author(s) and do not necessarily reflect the views of the National Bureau of Economic Research.