President Donald Trump barely mentioned Obamacare in his first State of the Union speech, though the issue dominated much of his first term in office.
But he did take a few seconds to highlight the GOP’s success in repealing the Affordable Care Act’s individual mandate as part of their tax overhaul.
“We eliminated an especially cruel tax that fell mostly on Americans making less than $50,000 a year, forcing them to pay tremendous penalties simply because they could not afford government-ordered health plans,” Trump said in the House chamber. “We repealed the core of disastrous Obamacare. The individual mandate is now gone.”
Trump is right on the surface, of course: The mandate is gone, and it was originally considered core to the ACA. But these days, most experts largely believe that the tax penalty for not having insurance was actually too low to have the desired effect, even as Trump cites its “tremendous” nature” and that the law’s markets will survive — if imperfectly — without it.
But on the margins, the mandate’s elimination will likely lead to some bump in premiums and fewer Americans having health coverage over the long term. That is what Trump chose to brag about before the nation Tuesday night.
Premiums are expected to rise once the individual mandate went away
Most analyses of the individual mandate agree that repealing the provision would have at least two outcomes: Premiums would rise, and some number of people would lose coverage.
The Congressional Budget Office estimates that 13 million people would lose coverage if the individual mandate were repealed, and that premiums in the individual market would rise by an additional 10 percent. The American Academy of Actuaries generally agrees. “Lower enrollment among healthy individuals would likely result, especially if they would have to pay the premium surcharge due to having prior gaps in coverage, putting upward pressure on premiums, all else equal,” the nonpartisan group wrote in a March 2017 letter to Congress.
For 2018, when the mandate’s enforcement was merely in doubt, health insurers usually budgeted in an additional 5 to 10 percent premium bump.
The more plans hike their rates to make up for the loss of the mandate, the more expensive coverage becomes, and the more healthy people who are likely to drop out of the markets, which makes the pool sicker and compounds the problem. Over the long term, we would expect some number of Americans to end up losing their insurance because it simply becomes too expensive without the mandate.
The mandate’s repeal could also drive some insurers out of the market, at a time when some parts of the country have already been at risk of having no insurers to sell plans through the ACA marketplaces.
Obamacare is also a lot more than the individual mandate
But Trump was right: Republicans did do away with an ACA provision that was central to their ideological opposition to the health care law. The mandate was often described as one leg of a three-legged stool that holds up Obamacare, along with tax subsidies that help people buy coverage and the protections for preexisting conditions.
The law’s individual marketplaces aren’t going to work as well without it. But they probably aren’t going to collapse either. Most policy experts already think two things:
- The mandate is too weak to compel more people to buy insurance. For many people who were on the fence, it was still cheaper to pay the penalty than to purchase health coverage.
- Most people who don’t receive subsidies are being priced out of the market. The people who remain in the market receive subsidies that protect them from rising premiums without the mandate.
The Obamacare markets without the mandate are likely to shrink to the people who receive generous subsidies and sick people who really need insurance. That is not an ideal market. But it still means millions of people will be able to afford comprehensive insurance under the law.
But then you have the rest of the law still in place. Obamacare expanded Medicaid eligibility to cover everybody with an income up to 133 percent of the poverty level (about $16,000 for an individual). It has covered more than 15 million people, according to the Kaiser Family Foundation, making up more than half of the coverage gains under the law.
So the Obamacare that will remain is one that still covers more than 20 million of the poorest Americans. Other Republican-led states that have so far rejected the Medicaid expansion could revisit their decision the longer the law stays on the books, especially with the Trump administration’s openness to Medicaid work requirements.
The rest of the law’s infrastructure will still be there too. Insurers will still be legally prohibited from denying people coverage or charging them higher premiums based on their medical history. It could make it easier, someday, for a future Congress to take steps to improve Obamacare, either by reinstituting the mandate or by expanding the tax subsidies to make insurance more affordable to more people.