GOP Tax Plan Has More Trouble: Eliminating The Individual Mandate Can't Be Saved

Yesterday, the Congressional Budget Office issued a letter from its Director, Keith Hall, to Senator Murray (D-Wash.), co-sponsor with Sen Lamar Alexander (R-Tenn.) of the Bipartisan Health Care Stabilization Act of 2017 (BHCSA), an act which had been the result of a bipartisan senate committee working before, and after, the senate failed to repeal Obamacare (ACA). The BHCSA was intended to stabilize the ACA’s health care insurance markets and save millions from losing their insurance by the elimination of the individual mandate as now incorporated in the current senate tax bill. This tax bill is ready for floor debate and amendments as early as today, November 30.

The intent of Senate drafters was to introduce simultaneously the tax bill and BHCSA. The latter certainly was to assuage concerns previously expressed by Sen. Susan Collins (R-Me.), though Sen. Lisa Murkowski (R-Ak.)---who along with Collins and McCain previously blocked repeal of the ACA---did not seem bothered with the mandate being eliminated, favoring consumer choice whether to purchase or not health insurance through Obamacare without concern or fear that if a policy was not purchased the IRS would impose a statutory penalty. However, she, as with Collins, signaled that the addition of the Obamacare stabilization packages could be enough to win their votes ("The CBO just released a report that should worry Sens. Susan Collins and Lisa Murkowski").

Let’s get back to the November 29 CBO letter.

In October 2017 (Congressional Budget Office, Bipartisan Health Care Stabilization Act of 2017 (October 2017))-and as updated this month (Repealing the Individual Health Insurance Mandate: An Updated Estimate (November 2017))-the agencies [Congressional Budget Office and the staff of the Joint Committee on Taxation] published a cost estimate for the BHCSA as well as a separate estimate for repealing the individual mandate. Repealing the mandate would result in a decrease of the number of insureds with health insurance of 4 million by 2019 and 13 million by 2027; premiums would increase by 10%. The BHCSA would by itself not substantially change the number of insureds; premiums would not change either. Requested then of the CBO by Senator Murray on November 21 was the impact of the BHCSA when combined in the same (tax) bill that repeals the individual mandate, and whether the combined effects would change the agencies previous estimates of the number of people with insurance coverage or premiums in the non-group insurance market.

CBO’s Hall concluded by saying,

“If legislation were enacted that incorporated both the provisions of the Bipartisan Health Care Stabilization Act and a repeal of the individual mandate, the agencies expect that the interactions among the provisions would be small; the effects on premiums and the number of people with health insurance coverage would be similar to those referenced above [13 million to lose insurance by 2027 and premiums hike up by 10% [above increases factored in already]].”

Where does this leave these two necessary votes for the tax bill? Murkowski remains a question mark but her reliance on the BHCSA making up for the loss of the individual mandate is now gone; Collins still has a bipartisan bill with Sen. Bill Nelson (D-Fl.) that, “gives $4.5 billion in federal funding to health insurers to offset premium increases after repealing the individual mandate.” ("The CBO just released a report that should worry Sens. Susan Collins and Lisa Murkowski"). But at this point, unless eliminating the individual mandate is removed, it is more likely than not that 13 million Americans will lose their health insurance and those least likely to afford it will have to pay 10% more in premiums. And the elimination becomes all the more of a Hobson’s choice because if it is taken out of the tax plan to satisfy Collins, Murkowski, maybe others like McCain, Senate republicans will have to look for another $338 billion to pay for their plan that the elimination of the mandate would have provided. That, in turn, no doubt will impact the thinking of deficit hawks like Bob Corker (R-Tenn.), Jeff Flake (R-Az.), and Jim Lankford (R-Okla.) that have their separate concerns over the GOP plan blowing a hole in the deficit of roughly $1.4+ trillion without needed revenues to neutralize it (and which will be no doubt addressed in a very soon-to-be released Joint Committee on Taxation filing.)

But, could it be that the GOP tax plan is nothing but a “rush-to-judgment” whose time has not yet come and thus cannot be saved without negatively harming the majority of Americans to be affected by its skewed provisions in favor of only the rich and wealthy? We can only hope.

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