There May Be Ways to Keep People Insured Even if Obamacare Mandate Is Repealed

Congress is on a path that appears to be heading toward repealing Obamacare’s individual mandate, and health insurers have long warned that repealing the penalty for not having insurance while guaranteeing coverage will lead to spiraling premiums and more uninsured people.

A provision that zeroes out the penalty was included in the Senate’s Tax Cuts and Jobs Act (S. 1), passed Dec. 2 by a vote of 51-49. The House, which passed its own tax cut bill in November that didn’t include the individual mandate provision, is likely to support the Senate on the issue.

But some health-care analysts say a pledge by Sen. Majority Leader Mitch McConnell (R-Ky.) supporting legislation to provide $10.5 billion for high-risk pools to cover people with serious medical problems over a two year period, as well as legislation that would fund the Affordable Care Act’s cost-sharing reduction subsidies for low-income people, could help mitigate the risks of repealing the individual mandate.

The Congressional Budget Office estimated that repealing the individual mandate would increase the number of uninsured people by 4 million in 2019 and 13 million in 2027 while reducing the federal deficit by about $338 billion over the 2018-2027 period. Average premiums in the nongroup market would increase about 10 percent in most years of the decade, the CBO said.

But the CBO also estimated that the Trump administration’s Oct. 12 decision to stop making the cost-sharing reduction (CSR) payments to insurers would result in 20 percent premium increases, Chris Sloan, a senior manager with health-care policy consulting firm Avalere Health, told me in an interview.

“Funding the CSRs would have a bigger impact on lowering premiums than getting rid of the individual mandate would have on raising premiums,” Sloan said. “It seems a combination of funding CSRs and a reinsurance program would outweigh the negative premium impacts of repealing the individual mandate.”

Health insurer analysts don’t agree, however. Having a mandate requiring people to have qualified coverage, even though it is weakly enforced, helps keep healthy people in the individual health insurance market, Cori Uccello, senior health fellow with the American Academy of Actuaries, told me.

“The individual mandate is an important piece of the Affordable Care Act, given the protections to people with pre-existing conditions” that are in the law, Uccello said.

Stay on top of new developments in health law and regulation, and learn more, by signing up for a free trial to Bloomberg Law.