Republicans are on the verge of achieving one of biggest policy goals of the past decade: unraveling the Affordable Care Act.
The Tax Cuts and Jobs Act, as being considered in the US Senate, repeals Obamacare’s individual mandate. That change, according to the Congressional Budget Office, would cut $338 billion over 10 years from Medicaid and insurance subsidies and lead to 13 million fewer people having health coverage. That will, according to the best evidence we have, lead to an increase in preventable deaths on the order of 15,600 people per year.
It will do more than that, though. It will completely destabilize the market for individual health insurance. The individual mandate serves a critically important function for people buying health insurance outside of an employer. It makes sure that young and healthy people with low health expenses buy insurance, which lowers premiums for everyone else. That ensures that people with chronic health conditions who don’t get insurance from work can buy coverage at an even barely reasonable price.
Without the mandate, the individual market could easily collapse into what’s known as a “death spiral,” in which healthy people flee the individual health insurance market en masse, leaving the remaining customers to just be less healthy or older people, who’d then face huge premiums. They’d get some help from Obamacare’s insurance subsidies, which would remain and cap premiums as a share of income for low- and middle-income people. But even that might not be enough to make the plans affordable. And if enough people quit, then insurers could stop offering plans in some areas altogether.
Some of the healthy and younger people, in turn, would then grow older and sicker. Some would get potentially fatal illnesses, and without insurance they wouldn’t be able to recover. That’s where that 15,600 deaths figure becomes relevant.
This is Obamacare repeal lite, and it’s a serious threat to the safety net
Republicans like to argue that repealing the mandate doesn’t take health coverage away from anyone. It just lets people choose! Medicaid expansion and insurance subsidies would remain for anyone who wants them. Then-Sen. Barack Obama unwittingly laid the groundwork for this argument in 2007 and 2008, when he opposed the mandate in debates with Hillary Clinton and insisted that universal coverage was possible without it.
And, indeed, some health care analysts have argued you can create other incentives to ensure healthy people still sign up. Paul Starr, a medical sociologist at Princeton, has proposed barring people who decline health coverage from government health subsidies for five years; people would have a choice, but the choice would have huge negative consequences. Republicans in Congress have proposed replacing the mandate with a surcharge you’d pay upon returning to health insurance.
Here’s the thing, though: If you replaced the mandate with something that actually worked, that actually succeeded at getting as many or more people to sign up for coverage, the CBO would score that as not saving money, perhaps even as costing money. Repealing the mandate saves money by reducing health coverage. Less health coverage means less Medicaid and insurance subsidy spending by the federal government. If you replace the mandate with something effective, coverage levels stay the same, no money is saved, and the mandate can’t be repealed to pay for tax cuts.
Put another way: Either the Senate tax bill kicks millions of people off insurance or it costs $338 billion more than its supporters say it does.
Reasonable people can argue about whether the 13 million figure is too high (or too low). But we don’t need to know the exact magnitude to know that repealing the mandate means millions fewer people with health insurance, and risks far higher premiums for those still getting health insurance.
This, for most Americans, is the most significant change in this bill. That’s especially true if the individual tax cut changes are, as Republicans are insisting, meant to be permanent. (In the bill as written, they expire at the end of 2025, resulting in an across-the-board tax increase on individuals, but Republicans say they’d intervene to prevent that from happening.) For the middle class, the tax cuts in this bill are minimal. Millions of people would even see tax hikes.
All of those changes pale in comparison to losing your health insurance, because you didn’t have the individual mandate to nudge you to buy. They pale compared to seeing your premiums double or triple because the individual market has gone into a death spiral.
The most acute changes this bill will make in Americans’ lives have to do with health care, not taxes. And the changes are all profoundly negative.
This is about to pass
At this point, Republicans’ repeated efforts to repeal Obamacare are something of a joke among liberals and Democrats. First Paul Ryan failed to push something through the House in March. Then he got his act together, passed something, and the Senate failed to pass anything, not even “skinny repeal.” Then there was a boomlet for the Graham-Cassidy proposal in September, which quickly petered out and died.
Each time, in the Senate, the proposals were defeated by a triad of Republican senators: moderates Susan Collins and Lisa Murkowski, and John McCain, who seems to just like stirring the pot. It was the legislative equivalent of the Simpsons scene where Sideshow Bob steps on rakes for, like, 30 straight seconds.
Liberals shouldn’t be laughing anymore. Now even Collins appears on board with the attempt to repeal the individual mandate in the context of tax reform. So is Bob Corker of Tennessee, another potential defector. Barring some sudden changes, this is going to pass the US Senate and quite likely become law.
There’s a chance, of course, that in conference committee the individual mandate repeal will be stripped out. It wasn’t in the bill that passed the House, after all. But if Susan Collins won’t stand up to defend the mandate, does anyone really think enough members of the House will? And with the mandate repeal raising $338 billion to pay for tax cuts Republicans desperately want, do we really think they’d part with it easily?
Republicans really are on the verge of repealing a significant part of Obamacare, of substantially growing the ranks of the uninsured and perhaps irrevocably damaging the health insurance market. They are dismantling one of the most important progressive achievements since the Great Society. They aren’t just cutting tax cuts for rich people. They’re reshaping the health care safety net in ways that will reverberate for years if they succeed.
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