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Without the Insurance Mandate Health Cares Future May Be in Doubt

By ROBERT PEARDEC. 18, 2017

https://www.nytimes.com/2017/12/18/us/politics/tax-cut-obamacare-individual-mandate-repeal.html

WASHINGTON — For years, the Obama administration said the health care system

as constructed by the Affordable Care Act could not survive without a mandate that

most Americans have health insurance. With surgical precision, the sweeping tax bill

that Republicans plan to pass this week will do away with that mandate.

What comes next for health care is unclear.

The demise of the Affordable Care Act’s mandate will lead to higher premiums and

lower enrollment in plans sold on the health law’s marketplace, Wendy K. Mariner, a

professor of health law at Boston University, said Monday. But she added, “I don’t

think we can say with any confidence” how much premiums will rise or coverage

will decline.

The Republicans’ move came as something of a surprise. Democrats rejoiced when

they defeated multiple Republican efforts to dismantle the health law this year. But

Republicans have never wavered in their opposition to the mandate, which they see

as a symbol of government overreach.

Democrats enacted the mandate, and President Barack Obama defended it all the way

to the Supreme Court. But he knew it was unpopular, and his administration was not

keen on enforcing it.

The mandate has been enforced with “a muffled bark and a toothless bite,” said

Thomas P. Miller, a health economist at the American Enterprise Institute and a critic

of the law.

Insurance companies and Democrats in Congress find themselves in rare agreement,

predicting that premiums will soar and insurance markets will swoon if the

government can no longer threaten people with tax penalties for going without health

insurance. The Congressional Budget Office estimates that repealing the mandate

penalties would increase premiums by 10 percent and leave four million more people

uninsured in 2019 and 13 million more uninsured by 2027.

Remarkably, after the millions of words written by lawyers to attack and defend the

mandate in court, the tax bill wipes it out with just two sentences. The penalty is

either a flat dollar amount, $695 for an adult, or 2.5 percent of household income

above a certain threshold, whichever is greater. The tax bill slices the penalty to “$0”

and “zero percent,” starting in 2019, relieving taxpayers of $43 billion in penalties

they would otherwise pay through 2027, the budget office says.

Researchers say the mandate sends a signal about the importance of coverage.

Without it, the Congressional Budget Office estimates that five million fewer people

would have coverage through the individual insurance market, five million fewer

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would be enrolled in Medicaid and three million fewer would have employer-

sponsored insurance.

“Medicaid and the subsidies explain maybe two-thirds of the increase in coverage

under the Affordable Care Act,” said Jonathan Gruber, a health economist at the

Massachusetts Institute of Technology who advised the Obama administration,

referring to tax subsidies for the purchase of insurance policies.

“But about a third of the increase in coverage is unexplained,” he said. “We think a

lot of that is due to the signal in the law. People say, ‘Hey, there’s this new law, I

should go sign up now.’ That signal is getting reversed.”

Eliminating the mandate will save the government more than $300 billion over 10

years because fewer people will receive insurance subsidies or Medicaid, the budget

office estimates.

Though Republicans are counting on those savings to help offset the cost of their tax

cuts, they say they doubt the power of the mandate.

In the weeks before he went to work at the White House, Brian Blase, President

Trump’s special assistant for health care policy, said that the Congressional Budget

Office had “significantly overestimated the degree to which the individual mandate

would induce relatively healthy people with middle-class income to buy coverage in

the exchanges.”

Most people with marketplace coverage receive subsidies so they are largely

insulated from premium increases, Ms. Mariner said. For people who do not receive

subsidies, she said, “the higher premiums could be devastating, and the insurance

market will look a lot like it did before the Affordable Care Act.”

Ana Gupte, a health care analyst at Leerink Partners in New York, said Monday: “It

is the carrot of the subsidies rather than the mandate that drives enrollment on the

insurance exchanges. The stick is not as effective as the carrot.”

Other parts of the law remain in force. The federal government will still help pay

premiums for people with low or moderate income. It will still prohibit insurers from

denying coverage or charging higher premiums because of a person’s medical

condition or history. It will still require insurers to provide specified benefits like

maternity care and drug addiction treatment. And millions of people who became

eligible for Medicaid as a result of the expansion of the program under the

Affordable Care Act can keep their coverage.

In the absence of an enforceable mandate, the people most likely to go without

insurance are younger and healthier consumers — the very people insurers would

most like to have as customers.

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Senator Sherrod Brown, Democrat of Ohio, said the tax bill was a bad deal because

many people would pay more in higher premiums than they would receive in tax

cuts.

But moderate Republicans who defied their leaders and voted against repeal of the

Affordable Care Act in the summer now support the tax bill.

“Eliminating the tax penalty does not take care away from anyone,” said Senator Lisa

Murkowski, Republican of Alaska. “Instead, it provides important relief to those who

have been penalized for choosing not to buy unaffordable insurance.”

A version of this article appears in print on December 19, 2017, on Page A19 of the New York

edition with the headline: Without the Insurance Mandate, Health Care’s Future May Be in

Doubt. Order Reprints| Today's Paper|Subscribe