The Senate Republican tax reform bill doesn’t end the health insurance mandate; it just eliminates the tax penalty if people choose not to buy, or can’t afford, government-approved health coverage. That’s like a huge tax cut for uninsured Americans.
The subsidies that help moderate-income families buy coverage — the most effective inducement to join Obamacare — remain in place, as do the insurance regulations.
President Obama initially opposed the mandate, only embracing it after lobbyists convinced him it would ensure nearly everyone enrolled.
They were wrong, as many of us predicted. Millions of Americans have discovered there are ways to game the system and avoid the penalty.
Only 6.5 million uninsured Americans paid the tax penalty, according to the latest IRS data, while 12.7 million uninsured claimed an exemption and didn’t have to pay.
Ending the mandate would allow people in the individual market who do not receive the taxpayer subsidies to find an affordable policy — though Congress might have to tweak the law so insurers can again offer comprehensive, though non-qualified, coverage.
The mandate also had little impact on the number of uninsured. The Census Bureau says 17.8 million people bought their own coverage in 2000, and 18.9 million in 2010 — four years before the mandate went into effect.
In 2016, 18 million had Obamacare-qualified individual coverage (11.1 million through the exchanges and 6.9 million outside). The primary reason for the decline in the total number of uninsured is the expansion of Medicaid. The tax bill doesn’t change that.
While government has no business mandating we buy the kind of health insurance bureaucrats prefer, the reason Republicans should eliminate the mandate is it helps “pay for” tax reform: Roughly $338 billion over 10 years can be applied toward lower tax rates.
That’s important because a growing economy, newly energized by tax reform, is the best way to ensure most Americans have good health coverage.