Time to (Officially) Say Goodbye to the Individual Mandate

In a very clever turn of the tables, Obamacare’s individual mandate may end up in the trash heap via Executive Order or by using the same logic Democrats and the Congressional Budget Office (CBO) used last year to save it during the GOP repeal debate.

According to news reports, President Trump has readied an Executive Order that would essentially broaden the “hardship exemptions” for the mandate, ultimately providing many more people waivers out of paying the penalty (or individual mandate) for not having health insurance (6.5 million taxpayers paid that penalty in 2015, although Kaiser Family Foundation data shows there are actually 28 million uninsured Americans).

However, that Executive Order is on hold as the GOP debates including a repeal of the mandate in the tax bill they are currently proposing, something made possible by Chief Justice John Roberts when he very controversially declared the mandate constitutional because it was essentially a tax (the government has the right to tax the citizenry).

The repeal of the mandate has been controversial because the CBO and Democrats insisted that it would leave 16 billion people uninsured. However, The Wall Street Journal notes that repealing the mandate, using those same figures, would result in a windfall of savings:

While the penalty raised $3 billion in revenue in 2015, Arkansas Senator Tom Cotton points out that abolishing the mandate would actually be a revenue gusher under the Congressional Budget Office’s scoring rules. Last December CBO projected that repealing the mandate would save $416 billion over 10 years because fewer people would sign up for Medicaid or receive subsidies on the exchanges. Fewer workers might also enroll in employer-sponsored plans, which could result in more taxable compensation…

…We think CBO has long overestimated the power of the individual mandate in driving coverage. And its faulty estimates hurt the GOP during the ObamaCare repeal debate by overestimating the number who would lose coverage. But now those estimates can help the GOP in the tax debate because CBO says an end to the mandate will mean fewer Americans would sign up for insurance and subsidies.

Essentially, the number of people Democrats insisted relied on the mandate for insurance is at least one of the baseline numbers the GOP is using to argue that repeal means that much savings can be amassed by removing the subsidies to those people.

By including the repeal in the proposed tax bill — while politically dicey to mix the two — the GOP can argue those savings can be used to fund tax reform:

Including repeal of the individual mandate in the tax bill instead of through executive order would create billions in budget savings that Republicans need to pay for tax cuts. According to a Congressional Budget Office report published in December 2016, repeal of the individual mandate would save $416 billion over a decade, since it would mean fewer people would be enrolled in Medicaid and fewer subsidy payments would go to people who sign up for private coverage. A new CBO report is expected Monday.

The repeal is not currently in the tax bill, known as the Tax Cuts and Jobs Act, but House Speaker Paul Ryan said this weekend that it was on the negotiation table among House Republicans.

Republicans, realizing the CBO numbers were against them, took the old adage “if you can’t beat ’em, join ’em” to a clever new level. And they just may fund their tax cuts AND rid the nation of an expensive health insurance mandate in the process.

Monday’s new CBO report should be interesting.

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