Senate Tax Plan Would Repeal Individual Mandate


November 16, 2017

Following months of political back-and-forth over healthcare reform, Republican lawmakers in Congress have opted to try a new approach in undermining the Affordable Care Act: repealing the individual mandate via tax reform. A recent tax bill introduced earlier this month now includes a provision to strike down the key requirement under Obamacare that every American hold health insurance or face a penalty fee at tax time for going uninsured.

An unpopular provision among voters regardless of party affiliation, the individual mandate nevertheless serves as an important feature under former President Obama’s signature healthcare legislation. Without it, critics say that the insurance market would be thrust into chaos.

The Congressional Budget Office (CBO), a nonpartisan agency, crunched the numbers and found that repealing the individual mandate would result in hefty savings for the federal budget – and around 13 million fewer people with health insurance by 2027. These are more conservative estimates than the CBO found earlier in the year when similar provisions in different Republican-backed healthcare reform bills were introduced to Congress.

The CBO is quick to point out that their estimates are hazy at best given uncertainty over the health insurance market, future reform efforts and other measures taken by the current administration. In its report, the CBO found that premiums over the next decade would increase by around 10 percent for most years due to repeal of the individual mandate.

Repealing the individual mandate would have the direct impact of letting people off the hook for buying health insurance, resulting in 4 million fewer insurance customers in 2019 alone. Indirectly, a repeal of this provision would likely force insurance premiums to rise as younger and healthier insurance customers – those least likely to buy coverage without a government mandate to do so – dropped out of the nongroup market. Despite rising premiums and a sicker insurance pool, the CBO found that the individual health insurance market largely would remain stable throughout the country over the next decade even if the mandate were repealed.

Republicans are slipping repeal into their tax bill in a two-fold effort to further weaken Obamacare, a longstanding goal of the party, and to pay for the tax bill itself. Because they’re using budget reconciliation as a means to passing tax legislation, they need 51 votes to avoid a filibuster. Republicans currently hold a 52-seat majority, allowing them to pass their bill without Democratic influence if they can get on the same page. Senate Majority Leader Mitch McConnell is confident that conservative lawmakers have the votes to pass the tax bill with the addition of the mandate repeal.

The House of Representatives has its own tax bill that does not include repeal of the individual mandate. Before anything can be signed into law, the two chambers of Congress must reconcile their proposals, and it’s unclear how this will play out over the next week.

President Trump supports the proposal to eliminate the individual mandate as do many Republican lawmakers, but more moderate members of the Senate, such as Susan Collins of Maine, appear less than thrilled about the prospect of getting into a healthcare debate yet again. The House is expected to vote on their bill this week. The Senate will hold a vote the week after Thanksgiving.