Opponents as well as supporters of Obamacare seem to agree on at least one thing.
Repealing the individual mandate in the Affordable Care Act (ACA) would have a dramatic effect on the nation’s health insurance market.
Most experts concur that the repeal would increase the number of people without health insurance in the United States, drive insurance companies out of the public marketplaces, and increase insurance premiums for most consumers.
Where they disagree is how severe the impact would be and whether the resulting chaos would be a good thing or a bad thing.
“Eliminating the individual mandate by itself likely will result in a significant increase in premiums, which would in turn substantially increase the number of uninsured Americans,” said America’s Health Insurance Plans (AHIP) in a letter to Congress cosigned by five other major health organizations, including the American Medical Association. “There will be serious consequences if Congress simply repeals the mandate while leaving the [ACA] insurance reforms in place.”
“We’re completely opposed to it [the repeal],” added Leni Preston, president of Consumer Health First. “This would be death by a thousand cuts to our healthcare system.”
However, Twila Brase, the co-founder and president of the Citizens’ Council for Health Freedom, said the short-term pain would produce long-term benefits.
“Sometimes it does take a bit of a crisis for people to make a move,” she told Healthline.
The tax bill connection
The repeal of the individual mandate is currently a provision in the Tax Cuts and Jobs Act in the Senate.
The bill has been approved by the Senate Finance Committee and is expected to be voted on by the full Senate sometime this week.
The House passed a similar tax cut bill earlier this month. However, that bill doesn’t contain a provision to repeal the individual mandate.
If the Senate bill is approved, negotiators from both houses of Congress would need to hammer out a final version.
White House officials say President Trump would support a tax cut bill with or without the individual mandate repeal.
A preliminary report by the Congressional Budget Office (CBO) estimates the tax cut bill would produce about $338 billion in tax savings over the next 10 years.
About half of that would come from the federal government paying fewer subsidies for health plans purchased on the ACA exchanges.
The other half would be in reduced Medicaid expenses.
Republican leaders say those savings would be used to help pay for the $1.5 trillion in tax cuts over the next decade.
The impact on the healthcare market
Supporters of the individual mandate say those tax savings would come at an enormous cost.
The CBO report predicts 13 million fewer Americans would have health insurance without the mandate by 2027.
About 5 million would be people who didn’t sign up for coverage in the ACA markets.
Another 5 million would be people who no longer received Medicaid.
Another 2 million would no longer be insured by their employers.
The CBO report also states the mandate repeal would cause insurance premiums to rise by 10 percent over the next decade.
Those numbers aren’t necessarily set in stone.
There are reports that the CBO may be recalculating some of its estimates.
In addition, a report by S&P Global Ratings estimates there would be only 5 million fewer Americans with insurance and $80 billion in tax savings.
Whatever the numbers, officials at the American Academy of Actuaries say that repealing the mandate without making any other changes to healthcare law would cause premiums to rise as insurance companies dropped out of the ACA marketplaces.
In a letter to Senate leaders, the actuary organization officials said the mandate is an “integral component” of the ACA.
They note that it’s a “key ingredient” in a system where insurance companies can’t deny coverage and have to accept consumers with preexisting medical conditions.
The actuaries explained that healthy participants are needed in insurance risk pools to compensate for unhealthier participants who cost insurance carriers more money.
“Eliminating the mandate without implementing an alternative means to drive enrollment among healthy individuals would likely result in a deterioration of the risk pool due to lower coverage rates among lower-cost individuals,” the organization’s letter states.
The group predicted insurance premiums would rise and, more importantly, insurance companies would flee from the ACA markets.
“If the individual mandate were to be eliminated, a deterioration in the risk pool profile would result. Premiums would be too low and would no longer match the costs of those covered. This could result in insurer losses and solvency concerns,” the organization’s letter states.”
“Insurers would likely reconsider their future participation in the market,” the letter adds. “This could lead to severe market disruption and loss of coverage among individual market enrollees.”
Dr. Scott Poppen, a retired physician who is president of Doctors for America, agrees with the actuaries’ assessment.
He said a system without the mix of healthy and unhealthy participants would spell financial disaster for insurers.
“It would put insurance companies into a death spiral,” he told Healthline.
As a result, Poppen said, insurance companies would either leave the market or try to lure healthy people by offering them cheaper “watered down plans.”
“People become under-insured in that scenario,” he said.
Preston of Consumer Health First also believes the number of uninsured will increase, premiums will rise, and there will be cuts to Medicaid if the mandate is repealed.
She said she finds the provision particularly offensive since it’s being used to pay for tax cuts for millionaires and corporations.
“It’s outrageous. It’s hard to understand,” Preston told Healthline.
The American Academy of Pediatrics (AAP) also has expressed its displeasure.
The organization says this provision is particularly concerning given that Congress has not yet approved continued funding for the Children’s Health Insurance Program (CHIP).
“Instead, elected officials are advancing tax legislation that undermines historic gains in health insurance coverage [and] misses an important opportunity to help lift families and children out of poverty,” the AAP statement reads.
Where to go from here
Brase of the Citizens’ Council for Health Freedom doesn’t dispute the predictions of chaos if the mandate is repealed.
However, she says the disruption might force states to take over their healthcare systems, something her organization has been saying needs to be done.
“The repeal could lead states to take up the mantle and do what they’re supposed to do,” Brase said.
If that happens, Brase said you’ll see more competitive rates and more choices for consumers.
You also won’t have 6.5 million people paying a tax penalty for not having health insurance, she adds.
“It could open the door,” Brase said.
However, officials at AHIP and the other organizations that signed the congressional letter say if you repeal the mandate, you need to make other changes.
“We are urging you to maintain the individual mandate unless and until Congress can enact a package of reforms to adequately assure a balanced risk pool and prevent extraordinary premium increases,” the letter states.
The organizations said that without a mandate incentives need to be built into the law to encourage healthier consumers to sign up.
“Experts agree that in order to have a health insurance system in which anyone can obtain coverage regardless of their health status, there must be incentives for everyone to enroll in and maintain coverage throughout the year,” the letter states.
The organizations offered to work with Congress to come up with a plan.
Poppen and Preston agree that other reforms need to be put in place if Congress decides to eliminate the mandate.
“Otherwise, we’re going back to the way it was before the ACA,” said Poppen. “And that was not good.”
“We want everybody to have access to good healthcare,” added Preston.
In the midst of enrollment
The debate comes in the midst of this year’s ACA enrollment period.
The sign-up window began November 1 and lasts until December 15, about half the amount of time of previous years.
Critics say the shorter sign-up period is part of a campaign by the Trump administration to sabotage Obamacare.
So far, enrollment on the healthcare.gov website is brisk.
During the first 18 days of the enrollment period, nearly 2.3 million Americans signed up for coverage in the 39 states that use the federal website.
That compares with the 2.1 million who signed up during the first 26 days last year.
So far this year, 1.7 million consumers are renewing coverage while nearly 600,000 are new enrollees.
However, experts point out with the shorter enrollment period, signups have to be double last year’s pace to equal the 12 million people who enrolled last year when the deadline was in late January.