Jeff Bingaman United States Senator from New Mexico

One component of the Affordable Care Act (ACA) is a provision that goes into effect January of 2014, requiring most Americans to obtain health insurance or pay a fine for not doing so.  This provision has sometimes been referred to as the "insurance mandate."

In writing the ACA, Congress incorporated this concept first put forth by the Heritage Foundation: the idea that all households obtain adequate insurance.  As originally suggested in their 1989 Heritage plan on Assuring Affordable Health Care for All Americans, all households should be required to obtain insurance to protect themselves from the "potentially catastrophic costs of a serious accident or illness."  This provision would ensure individual responsibility for one's own health while affirming the implicit contract between individuals and society—that society has a moral obligation to make sure its citizens don't suffer from unavailability of health care.

The reality is, health insurance has been out of reach for many Americans because they either could not find a plan that would accept them because of a pre-existing condition, or health insurance was too expensive.  Others believe they were too young or too healthy to need health insurance.

As a result, many people who had insurance were the ones who actually needed health insurance -- in other words, many of the people paying into the health insurance system were also withdrawing benefits from the system.  Insurance works best when the risk is spread widely.  Without healthy people also paying into the system, health insurance is expensive because insurance companies are paying the medical costs for a disproportionally high number of their customers.

At the same time, those who have been unable to afford health insurance have had to turn to their local emergency rooms for both life-saving and routine health care.  The cost of that care has been covered by the federal government and by Americans who have insurance.  According to one study, the average American family paid $1,000 in premium payments annually to cover the cost of the uninsured.

Because insurance operates best when the risk is spread among a large pool, the ACA requires most Americans to purchase health insurance.  Those with an income less than four times the federal poverty level—currently $44,000 for an individual and $88,000 for a family of four—will receive subsidies from the federal government to help purchase insurance.  Those who simply do not comply with the mandate will be fined.  The penalty starts modestly to encourage participation, at $95 per individual in 2014, and increases over time (to $695 a year or 2.5 percent of household income).

Without a mandate, it would be very difficult for some of the most popular provisions of the ACA to be implemented – including those that prevent health insurance companies from denying coverage to Americans with pre-existing conditions and the elimination of yearly and lifetime caps on coverage.

You can watch a video demonstration on how health care reform works, and why the individual mandate is necessary, online.