Republicans failed to repeal and replace the Affordable Care Act, but they can still save face and take a big step in the right direction by using tax reform to eliminate the mandate to have health insurance — which, fortunately, helps pay for tax reform. Here’s why.
Ending the mandate will have little impact on the number of uninsured. Democrats, the media and the Congressional Budget Office (CBO) were enamored with the mandate to have coverage. They all believed, despite many of us warning them to the contrary, that the large majority of the uninsured would dutifully obey their betters and get coverage once the government told them they had to.
However, the number of people buying coverage in the individual (i.e., non-group) market, which includes the ObamaCare exchanges, has been roughly the same for a decade or more. The decrease in the number of uninsured came primarily from ObamaCare’s Medicaid expansion.
Thus, as long as the taxpayer-backed insurance subsidies continue to flow and the Medicaid expansion remains, ending the mandate will have little impact on the number of uninsured.
Indeed, the biggest threat to having coverage these days is insurers fleeing ObamaCare, leaving people with few or no options — and what options they do have are very expensive and include very few providers.
The CBO just announced it expects about 13 million fewer Americans would have insurance by 2027 if the coverage mandate is repealed. Maybe, but given the collapse of the individual market under ObamaCare, we will see the uninsured number grow anyway.
Ironically, ending the mandate and letting people buy what they want and can afford might well increase the number of insured.
Republicans need “pay fors,” and the coverage mandate is a biggie. In years past, the CBO estimated that ending the mandate to have coverage would save the government $416 billion over 10 years.
If Republicans included a provision eliminating the mandate, that change would reduce the cost — referred to as a “pay for” — of their tax reform proposal. And the less money the government loses on tax reform, the happier many of the Republican fiscal hawks will be, making it easier to pass the legislation.
Strangely — and very suspiciously — the CBO has been rethinking its older estimate. Analysts apparently now realize the coverage mandate isn’t that effective, and so ending it would, in CBO’s opinion, save less money.
Republicans immediately expressed their outrage at the CBO’s change of heart, since it could be seen as an effort to save ObamaCare and undermine tax reform at the same time.
As a result, CBO Director Keith Hall just released a blog post with a preliminary estimate that eliminating the mandate would save $338 billion over 10 years. He explained that the agency is revising its methods, but “because that work is not complete and significant changes to the individual mandate are now being considered as part of the budget reconciliation process, the agencies are publishing this update without incorporating major changes to their analytical methods.”
While $338 billion is still about $80 billion below its earlier estimates of $416 billion — with no accompanying explanation for the decrease, yet — Republicans need all the pay-fors they can get, and ending the mandate is one good source.
The best way to grow the number of insured is to grow the economy. If Republicans include the mandate repeal in tax reform, Democrats and the media will protest that the number of uninsured will grow. In fact, a strong economy — not government mandates and penalties — is the best way to increase the number of people with private health insurance.
When the economy is firing on all cylinders, which it never did under the lackluster Obama economic policies, the labor market becomes tight and employers offer higher wages and better benefits, including health insurance, to attract good workers. Tax reform done right will give us that strong economy.
End the health insurance mandate and apply those savings to the tax reform bill. The only loser will be big government.