Final answer:
The individual mandate of the ACA imposed a penalty for not having health insurance with the aim of mitigating the adverse selection problem in the insurance market. This measure required all consumers to purchase insurance, broadening the risk pool and helping to maintain affordable premiums. The penalty was eliminated after 2018, but the ACA's coverage rates have sustained their increase.
Step-by-step explanation:
The failure that carries a penalty for not having coverage is the individual mandate of the Affordable Care Act (ACA). This mandate required individuals to purchase health insurance or face a fine. The purpose of the individual mandate was to prevent an adverse selection problem where only those with high health risks would buy insurance, leading to significant losses for insurance companies and higher premiums for everyone. By requiring even the healthiest individuals to purchase insurance, the overall risk pool was enlarged, which helped keep average premiums affordable and allowed more reasonable plans to be offered by insurers.
Despite the individual mandate penalty being reduced to $0 after the end of 2018, the ACA's coverage rates continued to increase. The funding for the increased coverage originally brought in by the individual mandate came from several sources, including $716 billion from Medicare spending adjustments and an additional 0.9% Medicare tax on wealthier Americans. Nevertheless, the Congressional Budget Office indicated that the ACA would still add $137 billion to the federal debt over the next ten years.