What CBO just said about the individual mandate (and how it could affect GOP tax reform)

Repealing the Affordable Care Act's (ACA) individual mandate would result in 13 million more uninsured U.S. residents and save the federal government $338 billion from 2018 to 2027, compared with current law, according to a report released Wednesday by the Congressional Budget Office (CBO) and the Joint Committee on Taxation.

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Report details

The report updates projections from last December that estimated repealing the individual mandate, which requires most U.S. residents to have health insurance or pay a penalty, would cut the federal deficit by about $416 billion over 10 years and result in 15 million additional uninsured U.S. residents by 2026, compared with current law.

CBO released the updated numbers as Republicans in Congress consider whether to include individual mandate repeal language in their tax reform bill. The latest score does not reflect any new legislative text, but were updated to use a summer 2017 baseline for evaluating the effects of repealing the individual mandate. CBO notes that the baseline does not include recent policy changes, such as the Trump administration's decision to halt insurers' cost-sharing reduction payments.

CBO estimated four million more U.S. residents would be uninsured in 2019 if the individual mandate's penalty for not purchasing insurance were eliminated, increasing over the next decade to 13 million in 2027, compared with current law.

CBO said it expected the public's reaction to an individual mandate repeal would unfold more slowly than it previously had estimated. CBO said that over time, some people would chose not to purchase insurance, while others would no longer be able to afford coverage.

CBO estimated that without the individual mandate, average premiums in the nongroup market would rise by about 10 percent annually for most years between 2018 and 2027. However, CBO predicted insurance markets would continue to be stable.

CBO said the federal savings largely would result from fewer people enrolling in Medicaid or qualifying for federal subsidies through the ACA's exchanges.

However, CBO acknowledged their projections could overestimate the individual mandate's effects. According to the report, CBO and JCT are revising their methods for estimating the individual mandate's effects, and preliminary data suggest "effects on the budget and health insurance coverage would probably be smaller than the numbers reported in this document."

CBO and JCT in the report said they "expect to complete and publish an estimate including and explaining the revisions at some point after the current budget reconciliation process is complete or along with a future update to the baseline."

Implications for tax reform

Republican lawmakers appear divided on whether to include individual mandate repeal language in their latest tax reform effort.

According to Vox, the latest projections would give Republican lawmakers more financial flexibility in their tax reform efforts. Under the budget resolution that allows the bill to pass via the Senate's reconciliation process, the tax reform bill cannot increase the federal deficit by more than $1.5 trillion over the next decade—and the House's current bill already is at that threshold, making it difficult to alter the plan. Repealing the individual mandate would give GOP lawmakers an additional $338 billion to work with.

However, some GOP lawmakers, such as House Ways and Means Committee Chair Kevin Brady (R-Texas), say including the repeal language could jeopardize the tax reform bill's passage, as some Republican senators may be unlikely to support the bill if it will increase the uninsured population (Diamond, "Pulse," Politico, 11/9; Scott, Vox, 11/8; Kodjak, "Shots," NPR, 11/8; Haberkorn, Politico, 11/8; CBO/JCT report, 11/8).

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