Senate Republicans yesterday decided to include in their tax reform plan a provision to eliminate the Obamacare mandate that forces people to buy health insurance or pay a penalty.
Some key facts regarding this move:
- About 6.5 million taxpayers paid a fine in 2016, according to a January letter sent by IRS Commissioner John Koskinen
- Repealing the mandate frees up about $338 billion over a decade, according to an analysis by the nonpartisan Congressional Budget Office
- a repeal would bring big savings because government spending on subsidies to help people afford coverage would plummet: 13 million fewer people would have health insurance in 2027
The number of people who would drop health insurance without the mandate is in dispute, but this is certainly a pleasant surprise that could strike a major blow to Obamacare. In a free society, citizens are not forced by the ruling class to purchase a good or service under threat of penalty.
The political danger of this move, however, is this:
- without a mandate, millions of people will drop insurance, in no small part due to unaffordable premiums that have ballooned substantially under Obamacare
- Many of those dropping insurance will be younger and healthier people; leaving the pool of insured to be older and sicker – this will drive up premiums even further
- the increased premiums cause things to get worse, and cries for a “single-payer” solution to healthcare may get louder
Without other provisions to head off the premium spiral, eliminating the mandate could backfire in the long term.