If "Obamacare" mandate is repealed, insurance markets would reel
WASHINGTON — Millions are expected to forgo coverage if Congress repeals the unpopular requirement that Americans get health insurance, gambling that they themselves won't get sick and boosting premiums for others.
The drive by Senate Republicans to undo the coverage requirement under former President Barack Obama's health care law is a sharp break from the idea that everyone should contribute to health care.
And just as important, it fits neatly with the effort by President Donald Trump's administration to write new regulations allowing for skimpier plans with limited benefits and lower premiums.
Put the two together and the marketplace for about 18 million people buying their own health insurance could look very different in a few years. Consumers would have new options with different pluses and minuses. They'd notice a shift away from health plans that cover a broad set of benefits. New winners and losers would emerge.
Defending the GOP's move, the Senate's chief tax writer said Wednesday that the "Obamacare" fines on people who go without coverage amount to a tax on working people. "It's a terribly regressive tax that imposes harsh burdens on low- and middle-income taxpayers," said Finance Committee Chairman Orrin Hatch (R-Utah.)
But Sen. Patty Murray of Washington, the ranking Democrat on the Health, Education, Labor and Pensions Committee, said repealing the requirement will undermine insurance markets and raise costs, particularly for those who need care. She accused Republicans of "sneaking devastating health care changes into a partisan bill at the last minute."
The Congressional Budget Office has estimated that repealing the insurance requirement would save the government $338 billion through 2027, mainly because fewer people would seek subsidized coverage. That would give GOP lawmakers money to offset some of the tax cuts they're proposing.
The CBO estimates the number of uninsured would rise by 13 million in 2027, reversing coverage gains seen under the previous administration. Because fewer people would be paying into the insurance pool, premiums for individual plans would rise about 10 percent. Little impact was expected on employer coverage.
Repealing the mandate would be like taking away the stick that nudges people to get comprehensive health insurance, while the skimpier plans envisioned by the Trump administration's regulation writers would be like new carrots introduced into the marketplace, said Katherine Hempstead, who directs health insurance work for the nonpartisan Robert Wood Johnson Foundation.
The result would be higher premiums for people who need comprehensive health insurance, often those who are older or coping with chronic conditions. "It's going to leave a lot of people poorly served," Hempstead said.
GOP economist Douglas Holtz-Eakin said he thinks the predictions of dire consequences are overstated and that repealing the mandate would be more like a safety valve for a health insurance market that's pricing out solid middle-class people not entitled to subsidies.
"In the individual market, this is all about getting premiums down so people will want to buy, as opposed to making them have to buy," Holtz-Eakin said. A former CBO chief, Holtz-Eakin said he thinks the agency's current estimates give too much weight to the coverage mandate.
He points to nearly 30 million Americans still uninsured. "We made it illegal to be uninsured, we're paying people to get insured, and we still have many uninsured," Holtz-Eakin said. "I don't think it's very effective."
A poll released Wednesday by the nonpartisan Kaiser Family Foundation found that 55 percent of Americans support eliminating the mandate as part of the GOP tax overhaul while 42 percent are opposed.
Julian Rostain, a cook from the Philadelphia area, said for him the mandate meant paying about $350 to the IRS for being uninsured during part of last year.
"I feel like I'm in good shape, and if I went a few months without health insurance, I wouldn't be terribly worried," said Rostain, in his late 20s. "I don't think it's fair when you penalize people who can't really afford it in the first place. It doesn't make sense."
But insurers, hospitals and doctors say some kind of requirement is needed.
"You really have to make sure that we have enough healthy people who are paying their premiums so that those who are facing significant chronic diseases are not left having to pay higher costs," said Dr. Michael Munger, president of the American Academy of Family Physicians. "I would say to younger, healthier people: 'You need to have coverage for when the unforeseen happens.'"
If the GOP succeeds in repealing the mandate, lawmakers may soon be looking for an alternative. "Ultimately, they'll need to have a nudge," said Republican health economist Gail Wilensky. "If they want to provide the protections for pre-existing conditions, they'll have to come up with something."
