CBO: More Uninsured, Higher Premiums From ACA Mandate Repeal

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By Sara Hansard

Sept. 15 — Repealing the Affordable Care Act’s individual mandate and associated penalties would lower the deficit by $305 billion by 2025, but it would raise the number of uninsured by 14 million in 2025, the Congressional Budget Office (CBO) estimated Sept. 15.

Eliminating the provision would increase the number of uninsured to 41 million uninsured in 2025, and raise premiums in the individual market by 20 percent “in all years” between 2017 and 2025, the CBO said in the preliminary cost estimate.

“We estimate that eliminating that requirement [to buy insurance] and the associated penalties would reduce the deficit by about $305 billion over the 2015-2025 period,” the CBO said in a summary of its cost estimate table. “That total consists of a $311 billion decrease in direct spending partially offset by a $6 billion decrease in revenues.”

Reductions From Exchange Subsidies, Medicaid 

Most of the reductions in spending would occur because outlays would be $110 billion less for exchange subsidies and $200 billion less for Medicaid and the Children's Health Insurance Program, the CBO said.

The CBO estimate didn't cite a particular congressional proposal. Senate Finance Committee Chairman Orrin G. Hatch (R-Utah) introduced legislation, the American Liberty Restoration Act (S. 203), in January that would repeal the Affordable Care Act's provision requiring individuals to maintain minimum essential health care coverage, known as the individual mandate. The bill has 29 Republican co-sponsors.

Under the ACA, most individuals must obtain health insurance or pay a penalty for not doing so.

Individual Market

The CBO broke down the 14 million person increase in the uninsured. The office said the increase would consist of roughly 5 million fewer individuals with coverage under Medicaid or the Children's Health Insurance Program (CHIP), 1 million fewer individuals with employment-based coverage, and 8 million fewer individuals with coverage obtained in the individual market, including individual policies purchased through the exchanges or directly from insurers in the nongroup market.

Joseph Antos, a health policy scholar at free market think tank American Enterprise Institute for Public Policy Research, told Bloomberg BNA that the 8 million reduction in the number of people who would obtain coverage in the individual market is significant. Antos has been critical of the Obama administration's health-care law.

“There are a significant number of people who are buying on the exchanges or buying individual coverage just through an insurer somewhere who, without some kind of a push, wouldn't buy it because they're not actively using health-care services,” said Antos, who was assistant director for health and human resources at the CBO in the late 1990s.

Young, Low-Income Would Drop Coverage

Most of the people who would likely drop coverage are young and have lower incomes, Antos said. “The people who are actively using health care or families where there's a child or close relatives who are actively using health care, they're going to hold onto their health insurance,” Antos said.

Simply eliminating the individual mandate wouldn't eliminate subsidies included in the ACA to help moderate and lower-income people pay health insurance premiums and help them with out-of-pocket expenses for copayments, deductibles and coinsurance, nor would it eliminate the ACA's expanded Medicaid program in states that have adopted the program.

The 5 million fewer people who would be covered under Medicaid or CHIP likely would include people who were “pushed into Medicaid,” Antos said. “A big issue with state Medicaid programs is they are a hassle,” he said. Beneficiaries must re-enroll annually and provide information showing they qualify, he said.

In a report issued in March, “Effects of the Affordable Care Act on Health Insurance Coverage—Baseline Projections,” the CBO estimated that in 2025, 27 million would be uninsured under the current law.

In March 2014, the CBO issued an estimate of legislation introduced in January 2013 (S. 40) that also would have eliminated the requirement that individuals purchase health insurance and eliminated penalties for not complying with that requirement. The CBO estimated that the legislation would increase the number of people without health insurance coverage in 2018 by about 15 million people.

To contact the reporter on this story: Sara Hansard in Washington at shansard@bna.com

To contact the editor responsible for this story: Brian Broderick at bbroderick@bna.com