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THE BUDGETARY TREATMENT OF
AN INDIVIDUAL MANDATE TO
BUY HEALTH INSURANCE
 
 
August 1994
 
 

This Congressional Budget Office (CBO) memorandum was prepared as part of CBO's continuing analyses of budget concepts and health care reform proposals. It discusses the pros and cons of including in the federal budget governmentally mandated payments by individuals for the purchase of health insurance. Robin Seller of CBO's Special Studies Division prepared the report under the direction of Robert Hartman and Paul Van de Water. The author thanks Gail del Balzo, Thomas J. Cuny, Douglas Hamilton, and Pearl Richardson for helpful comments. Matthew Eyles prepared the memorandum for publication. Questions about the analysis should be directed to the Special Studies Division.
 
 

CONTENTS
 

SUMMARY

INTRODUCTION

AN INDIVIDUAL MANDATE WOULD BE UNPRECEDENTED

THE BUDGETARY TREATMENT OF AN INDIVIDUAL MANDATE IS UNSETTLED

SHOULD THE COSTS OF COMPLYING WITH AN INDIVIDUAL MANDATE BE INCLUDED IN THE FEDERAL BUDGET?

CONCLUSION
 
 


SUMMARY

Several of the health care reform bills being considered by the 103rd Congress contain mandates by the federal government that would require individuals, employers, or a combination of both to purchase health insurance. The imposition of an individual mandate, or a combination of an individual and an employer mandate, would be an unprecedented form of federal action. The appropriate budgetary treatment of such a policy, therefore, has not been addressed.

The traditional sources of guidance on such matters do not resolve the issue of whether the costs of complying with an individual mandate should be included in federal budget totals. There are good arguments both for and against inclusion of these costs in the budget. It is therefore not only appropriate but necessary that the Congress and the President explicitly decide the proper budgetary treatment of an individual mandate if one is to be part of any health care reform legislation.

This document is available in its entirety in PDF.