By Sy Mukherjee
December 20, 2017

The GOP’s new tax bill, which passed Congress on Wednesday afternoon after one last vote in the House of Representatives and will be signed by President Donald Trump, is also a health care bill. The tax bill does at least as much (if not more) to upend Obamacare, or the Affordable Care Act, than even all of the Trump administration’s thousand cuts to the health law over the past year by repealing the individual mandate. Which raises the question: Just what is the Obamacare individual mandate? And what does its repeal mean for Americans?

For starters: Contrary to a statement that President Trump made Wednesday, nixing Obamacare’s individual mandate does not mean that Obamacare has been repealed in the GOP tax bill. The individual mandate, which requires most Americans (other than those who qualify for a hardship exemption) to carry a minimum level of health coverage, is actually still in effect for 2018—meaning that you may have to pay a steep tax fine if you don’t have health insurance, for one thing. And even after the individual mandate repeal goes into effect the following year, Obamacare’s individual insurance markets, federal subsidies to help Americans pay monthly insurance premiums, and Medicaid expansion in the dozens of states that implemented it will all still be in effect barring further Congressional action.

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Repealing Obamacare’s individual mandate won’t affect most people. That’s because the vast majority of Americans receive health coverage through their employer or through a public health program like Medicare, Medicaid, or military health services. Obamacare’s private, individual insurance markets (which, again, will still be around after the mandate is gone, and more than 70% of consumers can purchase government-subsidized plans in them) will go through some turmoil, though. Those markets are meant for people who don’t have access to employer coverage but make too much money to qualify for safety net programs like Medicaid, or Americans who are self-employed.

The entire point of Obamacare’s individual mandate is to make sure that it’s not just sick people who are buying health insurance in these markets. By widening insurance risk pools to include a mix of young and old, healthy and sick, premiums go down in the overall market (and people don’t simply sign up for insurance when they’re sick only to ditch it when they don’t need coverage anymore).

 

Ultimately, repealing Obamacare’s individual mandate would cause 13 million fewer Americans to be insured in 2027 compared with current law, according to the nonpartisan Congressional Budget Office (CBO). Healthier and wealthier people may choose to forgo coverage, and even poorer, medically needy people may not sign up for insurance because they don’t know which options are available and there may not be the same sense of urgency to enroll without the mandate. The CBO also predicts that premiums in the markets would spike 10% without Obamacare’s individual mandate as the exchanges are left with a sicker consumer pool. However, for most Obamacare enrollees (those making between 100% and 400% of the Federal Poverty Level), an accompanying increase in federal subsidies will make up for higher premiums. Those making above that income level (about $48,000 for an individual or $98,000 for a family of four) will have to face the brunt of premium increases, though.

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