There’s No Reason For Congress Not to Repeal the Individual Mandate in Tax Reform

On Tuesday, Senate Republican leaders announced plans to scrap Obamacare’s individual mandate in their latest tax reform legislation. If passed, the mandate would be fully repealed by 2019.

Speaker of the House Paul Ryan, R-Wis., has already signaled willingness to include the measure in the House tax reform bill should the Senate bill pass.

Lawmakers in both chambers would be wise to see this effort through. The mandate — which fines people who don’t purchase Obamacare-compliant health insurance — has failed to stabilize the exchanges and spur enrollment. Instead, it has imposed billions of dollars in taxes on middle-class Americans.

Obamacare’s proponents hailed the individual mandate as the backbone of the law. People who don’t purchase Obamacare-compliant plans are required to pay a tax of 2.5 percent of household income or $695 per adult, whichever is greater. In theory, forcing healthy people to purchase insurance should offset the costs of coverage for the sick.

But the mandate hasn’t compelled nearly as many people to enroll as analysts once expected. In 2014, the Congressional Budget Office predicted that 24 million people would buy insurance through Obamacare’s exchanges by 2017. In reality, barely 10 million were enrolled as of this past March.

Those who have enrolled have been disproportionately sick. Insurers haven’t collected enough premium dollars from healthy people to offset the costs of care for sicker enrollees, so they’ve lost billions of dollars.

Those losses have forced insurers to hike premiums 99 percent for individual plans and 140 percent for family plans since 2013.

Millions of Americans have foregone insurance because they can’t afford these skyrocketing premiums. In 2016, roughly 45 percent of uninsured adults cited the cost of coverage as the main reason they didn’t have insurance.

Many of these folks have been forced to pay the mandate penalty. About 6.5 million people, a quarter of all uninsured Americans, paid the tax last year. That cost them a whopping $3 billion.

This tax has fallen disproportionately on the lower middle class. Four out of five people who paid the penalty had an annual income of less than $50,000.

Forcing patients to “choose” between outrageously expensive health insurance or a hefty fine is cruel. By repealing the individual mandate, Congress will free millions of people from one of Obamacare’s most onerous regulations.

Read more . . .

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

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