Repealing Obamacare’s individual mandate would lead to 13 million fewer Americans having health insurance and save the federal government $338 billion in the next 10 years.
The numbers come from a new report from the Congressional Budget Office which re-scored the repeal as Republicans consider including it in their tax reform proposal as a means of saving money — and striking a blow to the health care law they’ve campaigned against but haven’t quite been able to undo. (President Trump is also reportedly considering an executive order that would defang the mandate.)
Four million more Americans would be uninsured in 2019, the first of the mandate’s repeal, with the uninsured figure increasing over the next decade to 13 million in 2027.
The mandate requires every American to have health insurance or pay a penalty. It’s the Affordable Care Act’s incentive for young and healthy people to buy insurance. Without it, healthier people would be expected to drop out of the market, which then increases insurance premiums. CBO estimated premiums on the marketplaces would go up 10 percent if the mandate were repealed.
So the net effect of repealing the mandate is: Fewer people insured, higher insurance premiums — but savings for the federal government.
The budget office had previously estimated that repealing the mandate would lead to 15 million fewer people having insurance and $416 billion in federal savings. These new numbers, which were updated to use a summer 2017 baseline for evaluating its repeal, represent a relatively modest change.
But they could mean a lot for the Republican tax reform dreams.
The new CBO numbers are a big deal for the GOP’s tax bill
The CBO’s revised estimate will have a duel effect on the Republican tax plan, if Congress decides to add the mandate’s repeal to their legislation.
First, repealing the mandate does save money because fewer people are projected to be enrolled in Medicaid and Obamacare’s insurance marketplaces. Those savings — $338 billion, under the new estimate — would be very useful to Republicans if they decide to add the mandate’s repeal to their tax plan.
Under the Senate’s “budget reconciliation” rules, the tax legislation can increase the federal deficit by $1.5 trillion over the next 10 years — and not a dollar more. The House tax bill currently hits that target exactly. It would be hard to make any further changes to the bill that reduce revenue or increase spending.
But by putting the mandate repeal in the tax bill, suddenly Congress would have another $340 billion to play with while tweaking their plan. They could cut rates for businesses and individuals even more, increase some tax deductions and tax credits, or otherwise spend more money in their bill in a way they can’t right now.
It’s a less little wiggle room than they had under the CBO previous estimate — $338 billion versus $416 billion — but the mandate would still provide hundreds of billions of dollars for the tax overhaul at a time when Republicans are struggling to find money.
However, Republicans would then open their tax overhaul to accusations that it is cutting health care coverage in order to cut taxes for the wealthy and corporations. Those attacks helped sink the GOP’s various Obamacare repeal plans in the Senate, where 50 of the 52 Republican senators must back the tax legislation under budget reconciliation.
The CBO has now provided a fresh attack line: A $1.5 trillion corporate tax cut is paid for by 13 million Americans losing health coverage.
Senate Republicans are already divided on this issue. Some, like Sens. Tom Cotton of Arkansas and Ted Cruz of Texas, want to do what Trump asks and repeal the mandate in the tax bill. But Sen. Lisa Murkowski (R-AK), who has already voted down three Obamacare repeal bills, told reporters this week that mixing health care with taxes “may be unnecessarily complicating things.”
CBO’s mandate estimates have been controversial
The mandate — and CBO’s estimates of its effects — have been a flashpoint over the last year. Republicans have accused the budget office of overstating exactly how much the mandate actually affects the insurance market.
“The CBO way overstates the power of Obamacare’s individual mandate to drive people to buy health insurance,” Avik Roy, one of the major proponents of the repeal bills that Congress considered earlier this year, told me back in May.
Sen. Bill Cassidy (R-LA), as he sought to build support for his Obamacare repeal plan with Sen. Lindsey Graham (R-SC) this fall, devoted the opening minutes of a briefing with reporters in September to dispelling the agency’s projections about the mandate.
Other conservatives have also urged the CBO to make its methodology about the mandate’s effects publicly available.
It’s a wonky, sometimes inscrutable debate, but an important one. The projected coverage losses for the various Obamacare repeal plans — upwards of 20 million — are a big reason why those bills failed in the Senate. If Republicans decide to repeal the mandate in their tax bill, you’re assured of seeing the “XX million lose coverage” attack from Democrats now that the CBO has updated its estimates.
A more significant update could be coming. CBO did meet in September to discuss revising their methods for estimating the mandate’s impact, I’m told. The agency said in its release Wednesday that it was in the process of reevaluating its model.
But these new numbers do not reflect any new methodology. They simply update the baseline for projecting the mandate’s effects.
So, for now, these new CBO numbers are most important for the Republican tax overhaul — and could determine whether they try to add Obamacare repeal to the equation.