Both chambers of Congress have voted to repeal the individual mandate, a move that cuts off a key leg of Obamacare and allows people to forgo buying insurance. It will also throw individual health insurance markets across the country into uncertainty.
It’s a turnaround for Senate Republicans, who briefly debated repealing the individual mandate while keeping the rest of Obamacare earlier this year, but ultimately backed off over fears this would destabilize the markets. But essentially that same plan is now poised to pass through Congress as part of the GOP tax bill. The plan, which now just needs the signature of President Donald Trump, will end the individual mandate after next year, and thus after the 2018 midterms. Beyond that, premiums are expected to continue to rise steadily year over year.
The change is projected to save the government hundreds of billions of dollars, which Republicans redirected to pay for further tax cuts in the bill. But it will significantly raise insurance premiums according to the Congressional Budget Office and a broad consensus of health experts.
“It’s going to have a pretty big effect, in particular on middle-class people,” said Timothy Jost, a health policy expert at the Washington and Lee University School of Law.
The individual mandate is viciously opposed by Republican lawmakers because it forces people who can afford insurance to buy it or pay a fine. The problem is that the individual mandate helps pay for elements of Obamacare that are hugely popular, such as the ban on insurance companies denying coverage to people with preexisting health conditions.
Doing away with one part while keeping the others fundamentally changes the structure of Obamacare. Insurers must still accept everyone who wants insurance, but there will be nothing stopping healthy people from leaving the markets in droves. They can do this knowing they can wait until they are sick or hurt to buy health insurance and the insurer cannot reject them.
On a large scale this leads to fewer healthy (and thus cheap) people paying into health insurance. This will cause premiums to rise by an extra 10% per year for those left on the Obamacare markets, according to the CBO, and 13 million fewer people having insurance by a decade from now.
Jost said he expects the markets to avoid all-out collapse in a majority of states, but some areas could see insurers walk away from the individual markets entirely.
“I think the market will survive in most states, insurance is just going to cost more,” he said.
Republicans, who have surged to election victories in no small part by promising to bring down premiums, have reacted to these projections in a variety of ways. Some have rejected the CBO estimates entirely. Others have embraced it, such as Sens. Lindsey Graham and John Cornyn, who say the change will break Obamacare entirely and create the need for full repeal, a goal Republicans fell short of despite repeated attempts earlier this year.
But another common response is that Congress will mitigate the destruction by also passing a fix — two of them, in fact. To win the vote of Maine Sen. Susan Collins — one of the three Republicans who killed Obamacare repeal this past summer — Senate Majority Leader Mitch McConnell promised the tax bill would also contain the two bipartisan stabilization plans.
One fix, the Alexander-Murray plan, named for Republican Sen. Lamar Alexander and Democratic Sen. Patty Murray, would reintroduce a key Obamacare subsidy that the Trump administration stopped paying in October. The other, the Collins-Nelson plan, for Collins and Democratic Sen. Bill Nelson, would essentially provide $4.5 billion over the next two years to states to help keep premiums down.
While Collins-Nelson would help, it is spread across only two years, whereas the mandate repeal is permanent. And experts widely expect Alexander-Murray to make little difference at this point because most states and insurance companies worked together to structure insurance plans to protect themselves from the loss of subsidies.
“The Alexander-Murray bill would do virtually nothing to blunt the effects of repealing the individual mandate,” said Larry Levitt of the Kaiser Family Foundation.
The CBO found that Alexander-Murray “would not substantially change the number of people with health insurance.” The CBO has not scored the impacts of Collins-Nelson. What the combined impact would be may be a moot point because many Republicans in the House say they will not support Obamacare subsidies, regardless of what McConnell promised.
“The person who’s asking this of us [Collins] did not help us on repeal of Obamacare, so why would we make those concessions?” said Republican Rep. Tom Cole. “We feel very much like we’re being jammed for the sake of one vote in the United States Senate on the tax bill. That’s not acceptable to most of our members.”