If the administration takes such action, it’s likely that fewer people would pay a financial penalty for not having health insurance, but people who hold onto their coverage would face higher premiums. In addition, the number of people without coverage would rise, maybe even dramatically.
There’s no way to know whether they accurately reflect what administration officials believe or how they intend to act. And it’s anybody’s guess as to whether Trump has personally settled on a course of action ― or if he even cares enough about policy details to decide on one.
Just about the only thing clear right now are the policy stakes. And they are significant.
The Individual Mandate And Why It Matters
The mandate is among the Affordable Care Act’s most controversial features, but experts say it’s essential for making the rest of the program work. It’s basically a tax on people who decline to get health insurance, even if available coverage meets the law’s definition of “affordable.”
The mandate is meant to encourage healthy people to buy insurance. It makes it possible for insurers to sell to anybody, regardless of pre-existing conditions, and not worry that people will wait until getting sick to enroll. The mandate also makes sure that people without coverage assume some financial responsibility for the charity care they would receive if they needed it.
Without the mandate or some other policy device to keep healthy people buying coverage, most experts say insurers would have to charge everybody else even more ― and, partly as a consequence, fewer people would end up having insurance.
Just last week, a report from the Congressional Budget Office predicted that removing the individual mandate but keeping other Obamacare provisions, such as the pre-existing condition guarantee, would lead to premiums jumping by 20 to 25 percent within a year, above and beyond current projections.
In addition, CBO said, the proportion of Americans without health insurance would rise even more dramatically ― by 18 million, which is roughly the number of people who have gotten coverage through the law, according to the most reliable estimates.
By design, the mandate is sizable: It’s either $695 per adult and $347.50 per child, or 2.5 percent of a household’s income ― whichever is greater, up to a maximum of $2,085 per family.
How Trump Could Weaken The Mandate
The law gives the Department of Health and Human Services broad discretion to grant “hardship” exemptions to people who say they can’t afford the mandate. There are signs that the Trump administration intends to use that leeway to minimize the penalty’s impact, in ways that go beyond what the Obama administration did.
And then on Sunday, Conway got a little more specific.
Trump “wants to get rid of that Obamacare penalty almost immediately, because that is something that is really strangling a lot of Americans, to have to pay a penalty for not buying government-run health care,” she said on ABC’s “This Week.”
When host George Stephanopoulos followed up, asking specifically whether Trump intended to “stop enforcing that mandate,” Conway responded, “he may.”
Of course, “he may” is not the same as “he will.” And Trump’s executive order didn’t change policy or otherwise commit the administration to a course of action. It was simply a statement of intent. The president and his deputies are under no obligation to follow through.
And for all of their bluster, Trump and his advisers might be worried about the consequences of weakening the mandate.
Acting Quickly On The Mandate Could Cause Serious Aftershocks
In a separate, prerecorded interview that ran Sunday on NBC’s “Today” show, Conway reiterated a promise she and other Republican officials have made repeatedly: That nobody with insurance through Obamacare right now would lose it in the transition to a new system.
That promise would be difficult, if not impossible, to keep if the Trump administration weakens or eliminates the mandate on its own, before a new health care system is in place.
“If the IRS ‘delays’ the individual mandate, the insurance markets in many states could go into a tailspin. Rates for 2018 will skyrocket and some insurers could fold,” Nicholas Bagley, a law professor at the University of Michigan and expert on Obamacare, explained at The Incidental Economist blog.
Some experts have warned that even hinting about efforts to undermine the mandate could destabilize Obamacare’s already-fragile insurance markets.
Many insurers suffered significant financial losses during the first few years of the program, because they attracted fewer healthier customers than they anticipated. This year, those carriers responded with larger-than-usual premium increases and, in some places, by withdrawing offerings altogether.
Early reports have suggested that insurers were expecting better performance this year, thanks in part to the higher premiums. But insurers are already calculating next year’s rates and are supposed to finalize them by the spring. If they are not sure the mandate will be fully enforced next year, they could decide on higher premiums or even more exits from state markets.