Since the U.S. Congress passed the Affordable Care Act, the individual mandate has been its least popular part. But without a requirement that all Americans get insurance or pay a fine, Obamacare supporters say, many healthy people would forego insurance. That would make it a challenge to keep one of Obamacare's most popular features: its requirement that insurers not exclude or penalize people for any previous or current illness. After several failed attempts to repeal the mandate, Congressional Republicans came up with a new approach: putting a provision ending the mandate's penalties into a tax cut bill that's their party's top priority.
The latest push to end the mandate came in a tax cut bill introduced by Senate Republicans in November. It was added in part to make it easier for the bill to meet its budget target: Dropping the mandate would reduce government spending by about $318 billion over a decade, according to the Joint Committee on Taxation. The Congressional Budget Office said that by 2027 about 13 million fewer people would have insurance if the mandate is ended, including 5 million in the individual market (where most people get government subsidies) and 5 million who'd drop Medicaid. Negotiators for the House of Representatives agreed to include the mandate repeal in a final version of a bill that both chambers must vote on. Senator Susan Collins, a Maine Republican who voted against an earlier proposal to repeal the mandate, supported the Senate tax bill after receiving promises from the Senate leadership that Congress would pass other legislation to strengthen insurance markets. But it was not clear whether the House would follow through. In 2015, more than 19 million people either claimed an exemption from the mandate or paid a penalty for not having insurance — more than the 11.7 million who signed up for private coverage under the law that year. About 6.5 million people paid an average $470 penalty for not having insurance, the Internal Revenue Service said.
Both the individual mandate and the continuous coverage proposal address the same problem. In fact, liberals like to point out that the individual mandate was originally a conservative notion, proposed in 1989 by the Heritage Foundation, and that it was a key part of the health-care reform adopted in Massachusetts in 2006 under Republican Governor Mitt Romney. The idea was that without such a prod, any promise to guarantee coverage to those with pre-existing conditions would collapse in a "death spiral" as older, sicker enrollees push up premiums, leading ever more "young invincibles" to decide they can skip insurance, leading rates to rise even further. As a presidential candidate, Barack Obama opposed the individual mandate, then changed his mind as he prepared legislation in 2009. In 2012, four Supreme Court justices said that the mandate was justified under Congress's power to regulate commerce and four called it unconstitutional. The deciding vote was cast by Chief Justice John Roberts, who upheld it not under the commerce clause but as part of Congress's power to tax. The bill passed by the House in May to repeal and replace Obamacare called for ending the mandate but allowing insurers to charge higher premiums to people buying coverage who had gone without it for more than two months.
Republicans have attacked the mandate as a government intrusion into private decisions: If a law could require you to buy insurance, they asked, what else could the government force you to buy? They also argue that ending the penalty would represent a tax cut for many low-income people, citing Internal Revenue Service data from tax year 2015 showing that 79 percent of households that paid the penalty earned less than $50,000 a year. Democrats defended the mandate as necessary to prevent so-called free riding: If insurers can't refuse to cover pre-existing conditions, some people won't pay for insurance until they're sick. Others think the mandate's impact in both directions is overblown: Analysts at S&P Global Ratings estimated in November that repealing it would mean only about 3 million to 5 million more people without health insurance in 2027, and government savings of just $60 billion to $80 billion. In their view, the carrot of government subsidies has proven more important than the mandate's stick.
Caroline Chen contributed to an earlier version of this article.
First published April
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