The Mandate is Effectively Repealed, but There are Consequences

The fee for not having coverage as been reduced to $0 on a federal level starting in 2019, but the side effect of that is less people obtained coverage and there is less revue to offset healthcare spending.

This trade-off has long been known, even before the change was included in the Trump era tax bill.

Consider the CBO and JCT’s 2017 analysis of the effects of repealing the mandate:

“CBO and JCT estimate that repealing that mandate starting in 2019—and making no other changes to current law—would have the following effects:

• Federal budget deficits would be reduced by about $338 billion between 2018 and 2027.
• The number of people with health insurance would decrease by 4 million in 2019 and 13 million in 2027.
• Nongroup insurance markets would continue to be stable in almost all areas of the country throughout the coming decade.
• Average premiums in the nongroup market would increase by about 10 percent in most years of the decade (with no changes in the ages of people purchasing insurance accounted for) relative to CBO’s baseline projections.

Those effects would occur mainly because healthier people would be less likely to obtain insurance and because, especially in the nongroup market, the resulting increases in premiums would cause more people to not purchase insurance.

If the individual mandate penalty was eliminated but the mandate itself was not repealed, the results would be very similar to those presented in this report.”

So far we have roughly 3 million less sign ups for 2019 open enrollment in the marketplace alone, so that part of the CBO projection seems to be relatively accurate in that sense.

Thus we can very generally assume that the other projections are also generally accurate.

That means hundreds of billions less in revenue to offset spending on healthcare and potentially higher rates to offset people moving to the short term market going without coverage (consider, higher rates means higher subsidies, which means more healthcare spending).

We won’t know the exact impacts until they occur, but in general there is a trade-off.

Freedom of choice and freedom from responsibility, but potentially at the cost to policy holders and citizens in the form of debt.

Also, one has to consider, to balance the budget we now either need new taxes, spending cuts, or some confirmation that tax cuts are increasing revenue enough to cover the gap.

And indeed, we can see cuts to assistance programs in the latest proposed Trump budget.

In words, effectively repealing the federal mandate does have consequences.

Is it that people didn’t want coverage (includes opinions)? Indeed, a portion of people who didn’t sign up likely didn’t “want” coverage or wanted short term coverage. The problem here is that it is hard to see the value in insurance until you need it. Insurance is expensive, so it is pretty human to roll the dice and go without it. In short, it is reasonable to guess that everyone “wants coverage” but many just don’t “want to pay for it.”