As Congress considers repealing Obamacare’s individual mandate as part of tax reform, some conservatives believe doing so would “fulfill [Republicans’] promise to the American people” by “return[ing] personal decisions about health care choices to patients.”
In reality, however, repealing only the mandate would accomplish little of the former, and virtually none of the latter. For this conservative, at least, the answer to what would fulfill Republicans’ promise echoes James Carville: At its core, an Obamacare repeal is about the regulations, stupid.
To be sure, repealing the individual mandate would alleviate a regressive tax on the poor, and create revenue to provide tax relief elsewhere. But, as a lawyer familiar with courtroom rules of evidence might say, repealing the mandate alone focuses solely on pruning back the fruit of the poisonous tree, rather than attacking that poisonous tree’s roots.
We Don’t Want to Own the Consequences of Our Policies
In 2009, Democrats probably didn’t want to subject themselves to attacks for spending trillions of dollars on new entitlements. They didn’t want to take the political hit for raising taxes and reducing Medicare spending to pay for those entitlements. Also, Democrats—not least Barack “Mandate to Buy a House” Obama, who ran against the mandate in the 2008 presidential primaries—certainly didn’t want to require individuals to purchase government-mandated insurance.
But they realized that imposing unprecedented federal regulations on insurers would raise premiums, necessitating requirements on employers to offer, and individuals to purchase, that costlier coverage, higher spending on subsidies to make that more expensive coverage “affordable,” and new taxes to pay for that higher spending.
By contrast, repealing only the mandate would do nothing to restore health-care freedom, or “return health care choices to patients.” While Americans would not face taxes for not buying coverage they may not want, need, or afford, they would have no greater or lesser ability to buy coverage they do want and can afford than they did in the first place, because all of Obamacare’s regulations would remain in place.
Moreover, repealing the mandate alone could allow Republicans to walk away from their promise to repeal Obamacare “root and branch,” because many seemed disinclined to dismantle Obamacare’s regulatory regime earlier this year. When debating “repeal-and-replace” legislation, the House proposed allowing states to waive some regulations, and senators considered an amendment permitting insurers to sell policies that do not comply with some of the regulatory requirements.
But neither proposal undermined Obamacare’s central principle: That Washington can and should impose myriad regulations on insurers. In fact, by creating an opt-out process at the federal level, both bills effectively reinforced Washington’s control of health insurance.
Both Parties Want to Control Americans’ Health Choices
It’s worth emphasizing the unprecedented nature of the change Obamacare wrought. Since 1947’s McCarran-Ferguson Act, which devolved regulation of insurance to states, the federal government made few and minimal intrusions into health insurance markets—until Obamacare. Yet purportedly conservative lawmakers have not pushed back on this breach of Tenth Amendment principles, with Washington intruding into states’ business.
For instance, Sen. Lindsey Graham (R-SC) claimed the proposal he and Sen. Bill Cassidy (R-LA) introduced would “empower each individual state to choose the path that works best for them.” Unfortunately, however, that plan would keep in place federal dictates regarding pre-existing conditions—the most costly of all the Obamacare mandates. There are other, arguably better, ways to cover individuals with pre-existing conditions than a federally imposed requirement, but by keeping control in Washington, the Graham-Cassidy plan would effectively preclude states from exploring them.
Lawmakers’ failure to adhere to federalism, and eradicate Obamacare’s Washington-centered regulatory regime, includes a cost—and ordinary Americans will pay the price. Because the tax bill would repeal the mandate to purchase coverage, while retaining all of the law’s regulations, it would either raise premiums in the individual insurance market, result in pressure for perpetual insurer bailouts funded by federal taxpayers, or—more likely—both.
Two years ago, for procedural and tactical reasons, Republicans chose not to attach provisions repealing Obamacare’s insurance regulations to the repeal bill that went to President Obama’s desk. If they fail to repeal—not waive, or opt-out, but repeal—the regulations this time around, they will undermine federalism and fail to meet their promise to eradicate Obamacare “root and branch.”
For both the Tenth Amendment and the American people looking for relief from Obamacare’s spiraling costs, the stakes couldn’t be higher.
Mr. Jacobs is founder and CEO of Juniper Research Group, a policy consulting firm based in Washington. He is on Twitter: @chrisjacobsHC.