Why Republicans Would Be Crazy To Repeal Obamacare’s Individual Mandate Inside Tax Reform

Why Republicans Would Be Crazy To Repeal Obamacare’s Individual Mandate Inside Tax Reform

Using repeal of the individual mandate to pass tax reform represents a game of Russian roulette that Congress should not even contemplate.
Christopher Jacobs
By

This week, word that the Congressional Budget Office (CBO) was preparing to re-estimate the fiscal impact of repealing the individual mandate prompted consternation among Republican ranks. Sen. Mike Lee (R-UT) claimed the budget office was playing a game of “Calvinball,” constantly revising its estimates and making up rules a la the comic strip Calvin and Hobbes.

CBO is reassessing the effectiveness of the mandate in light of research published earlier this year by a team of researchers including Jonathan Gruber—yes, that Jonathan Gruber—that examined the effectiveness of the Obamacare mandate in the law’s first few years.

On Wednesday, the budget office reduced its estimate of the fiscal savings from repealing the mandate, from $416 billion in an estimate published in December to $338 billion. CBO says it will publish a larger reassessment of the mandate’s impact at some undefined point in the next few months. The move comes as some are proposing that Republicans attach repeal of the mandate to the tax reform package, to help finance additional tax relief.

Consternation about CBO aside, the debate speaks to larger concerns about the effects on both health policy and tax policy of repealing the mandate.

Inconvenient Truths are Truths Nonetheless

Lee will find no argument from this observer about the need for CBO to increase its transparency. As previously noted, I’ve seen it up close and personal. Former CBO Director Doug Elmendorf repeatedly failed to disclose to Congress material omissions in CBO’s analysis of Obamacare’s CLASS Act—omissions that could have led the budget office to conclude that the program was financially unstable before Congress enacted Obamacare (with the CLASS Act included) into law.

That said, some people on the Right apparently think that difficulties with CBO allow them simply to ignore or dismiss its opinions. Witness this response back in July, when I noted that CBO believed one version of the Senate “repeal-and-replace” bill would raise premiums by 20 percent in its first few years:

Whether discussing provisions in that bill, or in repealing the mandate as part of tax reform, the fundamental point remains: Repealing a penalty that encourages healthy people to obtain health coverage, while retaining all of Obamacare’s regulations that have attracted a sicker-than-average population to the exchanges, will raise premiums. The only question is by how much. CBO stated Wednesday it believes premiums will rise by “about 10 percent in most years of the decade.”

The reconciliation bill being used as the vehicle for tax reform does not include reconciliation instructions to the House Energy and Commerce and Senate HELP Committees, the primary committees of jurisdiction over Obamacare’s regulatory regime. Because the tax reform bill cannot repeal, waive, or otherwise alter any of the Obamacare regulations, repealing the mandate as part of tax reform will definitely raise premiums.

Do Republicans Want to Repeal Obamacare’s Regulations?

This criticism shouldn’t apply to Lee, who fought hard to repeal as much of the Obamacare regulations as possible during the budget reconciliation debate in July. However, many other Republicans have demonstrated a significant lack of policy forthrightness on the issue of Obamacare’s regulatory regime. For many reasons, the claim that Republicans can “repeal” Obamacare while retaining the status quo on pre-existing conditions presents an inherent policy contradiction.

However, given many members of Congress’ reluctance to dismantle the regulatory regime, Republican leaders could easily use a repeal of the individual mandate as part of tax reform as cover to claim that they “did something” on health care, letting them walk away from the issue entirely. Unfortunately, repealing the mandate while keeping the regulations in place would represent the wrong “something”—raising premiums, while failing to dismantle the regulatory regime that has led premiums to more than double since 2013.

Health Policy Is Taking a Back Seat to Tax Policy

Whatever the merits of using the revenue from the mandate’s repeal to help the tax reform effort, Republicans did not campaign for four straight election cycles on enacting tax reform. They campaigned on repealing Obamacare.

From a health policy perspective, enacting a “solution” that involves repealing the mandate and walking away from the issue would represent a bad outcome—one measurably worse than the status quo. Insurance costs—the health care priority that Americans care most about—would rise, only alienating voters who objected to Democrats not delivering on the $2,500 per-family reduction in premiums Barack Obama promised in 2008.

Done right, tax reform can rise and pass on its own merits. But using repeal of the mandate to pass tax reform—which would lead to another round of high premium increases in (you guessed it!) the fall of 2018—represents a game of policy and political Russian roulette that Congress should not even contemplate.

Photo By Martin Falbisoner - Own work, CC BY-SA 3.0, Link

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