Doomsday Will Not Follow Repeal of Obamacare’s Individual Mandate

Congressional repeal of Obamacare’s individual insurance mandate penalty is not tantamount to pressing the button on the doomsday machine.

Critics of the Senate tax bill say repeal of the mandate penalty to buy Obamacare coverage will result in a spike in premiums, an increase in the numbers of the uninsured, and a “collapse” of the health insurance markets. In other words, the individual mandate is the “glue” that holds Obamacare together.

The assumption: Millions of Americans will buy Obamacare coverage—regardless of whether they want it or like it—because the government forces them to do it, and penalizes them if they do not.

Do we have compelling evidence that this is, in fact, the case? No.

Do we have evidence that the mandate is not the “glue” holding everything together? Sure do.

No human behavior is inevitable, of course. That is why, in the case of the individual mandate, the certitude of its supporters is unwarranted.

If the mandate were such a powerful force in reducing the numbers of the uninsured, restraining premium growth, and contributing to a robust expansion of choice and competition in the health insurance markets, then almost four years of empirical evidence would verify that proposition. It does not.

Consider coverage. In their November 2017 assessment, the Congressional Budget Office estimates that repeal of the individual mandate would result in 10 million fewer insured Americans over the next 10 years, including 5 million persons who are getting “free” care through Medicaid.

Accessing even “free” goods and services requires federal coercion, apparently in the uniquely weird world of federal health policy. Since 2010, as noted by the White House and others, the Congressional Budget Office’s coverage projections—upon which future coverage reductions are based—have not only been wrong, but in many cases, spectacularly wrong.

Curiously, in their assessment, the Congressional Budget Office reports that the agency is now revising its methodology, and says that the “estimated effects on the budget and health insurance coverage would probably be smaller than the numbers reported in this document.”

That is progress.

The crucial policy question is this: Does the law’s individual mandate—and its penalties—drive coverage increases?

Examining coverage data from 2012 through 2014, researchers writing in the New England Journal of Medicine, including Professor Jonathan Gruber, observed,

“When we assessed the mandate’s detailed provisions, which include income-based penalties for lacking coverage and various specific exemptions and penalties, we did not find that the overall coverage rates responded to these aspects of the law.”

Gruber and his colleagues further noted that the tax penalties in place in 2014 ($95, or 1 percent of household income) were “modest” and that with the imposition of the 2016 penalties ($695, or 2.5 percent of household income), “the mandate may play a larger role over time.”

Well, no. When the 2017 option is, say, paying $695 or an average monthly premium of $393 combined with an average deductible of $4,328, the mandate is no more powerful as an economic incentive today than it was in 2014, when Gruber rendered his assessment. Meanwhile, despite the individual mandate, coverage levels have not only fallen dramatically below the Congressional Budget Office’s earlier projections, but they also appear to be levelling off.

Independent analyses, based on raw insurance data, show a continuing poor performance in private insurance enrollment. Over the 2014-2016 period, public and private enrollment grew by 15.7 million persons, according to a Heritage Foundation analysis, but 89 percent of that growth was attributable to Medicaid and Child Health Insurance Program enrollment.

Between 2014 and 2016, there was a significant drop in the number of “unsubsidized” persons in the individual market from 11.1 million to 9.4 million.

According to a recent report in The New York Times, in 2015, 6.7 million tax-filers (representing themselves or their families) simply paid the mandate penalty rather than buy the Obamacare coverage, and over 12 million tax filers claimed an exemption from the mandate penalty.

In 2016 alone, individual market enrollment actually declined by 583,000. The mandate, whatever else it is accomplishing, is not preventing the decline.

Consider also premiums. When Congress enacted Obamacare, the law’s supporters believed the individual mandate would compel dramatic participation in the markets, and the influx of new enrollees would stabilize premium growth.

Beginning in 2014, the first year of the law’s full implementation, consumers in the individual markets, with very few exceptions, were stunned by rate shocks. In 11 states, for young 27-year-olds, premiums more than doubled. And the same was true for older enrollees, aged 50, in 13 states.

Surveying the uninsured that year, Bankrate.com found that one-third of the uninsured planned to remain uninsured, and 41 percent of those responding claimed that the Obamacare coverage was “too expensive.”

The big “no shows,” from the beginning, were the younger and healthier enrollees that were supposed to enroll in the exchanges and spread the risk, and therefore restrain or even reduce the premium costs. Obama Administration officials initially expected 40 percent of their initial enrollment to be comprised of persons 18 to 34.

Never happened.

In 2015 and 2016, premiums continued to rise—a direct contradiction of President Barack Obama’s silly promise that the law’s enactment would mean that “typical” families would see a $2,500 reduction in their premiums.

In 2017, once again, Americans trapped in the Obamacare markets faced a 25 percent increase in the premium costs of both the standard and most popular plans in the exchanges. For 2018, based on the preliminary data, analysts with Avalere are projecting a 34 percent increase in the standard plans.

The big premium picture is depressing. Since 2013, Obamacare’s premiums for single coverage have averaged an increase of 99 percent, while family premiums have increased 140 percent. Whatever impact the mandate is having on the insurance markets, it is not restraining premium growth

The anticipated “market collapse” has, in fact, already happened, and the individual mandate did not prevent it. In 2013, there were 395 insurers in the individual markets. That number declined to 307 in 2015, and down to 218 in 2017.

Preliminary data indicates that insurer participation will fall further down to just 181 in 2018. The Obamacare exchanges were never real “markets” in the first place, but federally supervised regulatory agencies where private coverage is “private” in name only.

The individual mandate with its penalties is not, in fact, the “glue” that is holding Obamacare together. It never was.

The lifeblood of the law is the generous taxpayer insurance subsidies, which attract and maintain the historically sluggish enrollment. The muscle and bone of Obamacare is the massive federal regulatory regime that governs the state health insurance markets.

The state exchanges have not blossomed into robust insurance markets, rich in choice and competition, but have declined to the point that they are, in effect, stagnant, heavily subsidized federal risk pools, disproportionately populated by the poor and the sick.

While Obamacare has reduced cost shifting to hospital emergency departments through exchange subsidies and Medicaid expansion, the levels of private insurance enrollment that Obamacare’s defenders anticipated did not occur.

The vast majority of exchange enrollees getting taxpayer subsidies will continue to get the subsidies and retain their coverage, regardless of the mandate. But the danger for those middle-class Americans who don’t get subsidies is that they won’t be able to continue to afford coverage, regardless of the mandate.

The job of Congress is not to maintain a monumental policy failure. Rather, Congress needs to strike out in a new direction and make policy changes that will allow state health insurance markets to flourish, and create conditions that will encourage millions of Americans to purchase coverage because they value that coverage—not because the IRS threatens them with penalties.

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The Senate Voted to Kill Obamacare’s Individual Mandate. Why That Was a Wise Call.

Obamacare’s individual mandate to buy federally standardized health insurance is a tax, courtesy of the Supreme Court’s elaborate exercise in creative writing: National Federation of Independent Business v. Sebelius (2012).

Legislators should judge a law by its results, not by good intentions. The record is clear: This particular tax is both unworkable and unfair. The Senate’s decision last week to repeal it is thus sound policy.

The individual mandate tax is not working. Its policy objective is to increase enrollment in private coverage and deter un-insurance.

To accomplish this goal, the law says that any person who does not buy an Obamacare plan would pay an annual tax penalty equal to 2.5 percent of their household income or $695, whichever amount is greater.

The penalty extends to families, including an annual penalty of $347.50 for any child under the age of 18 with a maximum annual family penalty of $2,085. Penalties increase annually by the rate of inflation.

Consider the incentives. Those who insure must buy Washington’s standardized insurance products, whether they like them or not, where premiums for standard plans this year have increased—not by the simple rate of inflation, but by 25 percent on average nationwide.

Before their coverage kicks in, consumers are faced with deductibles this year that average $3,572 for single persons and $7,474 for families in the standard (“silver”) plans. If consumers instead buy the “cheapest” (“bronze”) plans on the exchange, they face an average deductible of $6,092 for single coverage and $12,383 for family coverage.

For millions of middle-class families, this is the equivalent of a second mortgage payment.

Incentives under current policy are therefore perverse. Paying the mandate’s tax penalties (and relying on hospital emergency room care if necessary) may be wrong or unwise, but it is a lot cheaper than forking over the big premiums and crazy deductibles.

Kaiser Family Foundation researchers estimated that persons without mandatory coverage in 2016 faced an average penalty of $738 per household, while upper income persons (legally ineligible for insurance subsidies) faced an average penalty of $1,450.

Obamacare’s Medicaid expansion is responsible for coverage increases, not mandate-driven private insurance. Most who buy “private” Obamacare coverage on the exchanges—more than eight out of 10 enrollees—get enormously generous taxpayer subsidies for insurance. They are not quaking in fear over the threat of mandate penalties.

Coverage considerations are important. In its latest contribution, the Congressional Budget Office estimates that, over the next 10 years, repeal of the mandate penalty would mean that 13 million fewer persons would have health insurance, including, weirdly, an estimated 5 million Medicaid enrollees who get “free” care.

To their credit, the professionals at Congressional Budget Office have repeatedly acknowledged the profound uncertainties surrounding their estimates on the impact of health policy changes, particularly in recent House and Senate reform legislation.

Let’s take those self-acknowledged uncertainties to heart.

The Congressional Budget Office’s key assumption is that this tax encourages people to buy Obamacare coverage. Logically, one can accept their estimates of future coverage reductions if, and only if, one accepts the their estimates of future coverage.

The problem is that, since 2010, Congressional Budget Office’s coverage projections have been spectacularly wrong. In 2016, for example, they projected 21 million people would be enrolled in the exchanges, but the actual number was roughly 11.5 million.

For 2017, as the White House reports, under Congressional Budget Office projections, there were supposed to be 25 million exchange enrollees—but only about 10.3 million persons enrolled. Not surprisingly, independent academic research also indicates that the mandate penalty has a relatively weak impact on increasing coverage levels.

If the Senate tax reform bill passes, will there be 13 million fewer insured in the next 10 years, as the Congressional Budget Office projects? Or, will it be the far less dramatic 3 to 5 million estimated by the independent analysts with S&P Global?

Who knows? In any case, the Congressional Budget Office’s past predictive performance should inspire no confidence.

A related reason why this tax is unworkable is simply that public officials are not prepared to vigorously enforce it. Based on 2015 data, 6.5 million Americans paid the mandate penalty rather than buy Obamacare’s high-cost coverage, and another 12.7 million were able to take advantage of the various exemptions from the mandate.

Curiously, the tax is also profoundly regressive, falling on middle to lower-income persons least able to absorb reductions in their disposable income. Based on the 2015 data, 79 percent of those who paid the tax penalty had annual incomes less the $50,000, while 37 percent of them had incomes less than $25,000.

Curiously, while campaigning against Hillary Clinton for the Democratic presidential nomination in 2008, Barack Obama himself opposed the individual mandate because he said that it would be unfair and unenforceable: “If a mandate was the solution, we could try that to solve homelessness by mandating everybody buy a house.”

Candidate Obama was right. President Obama was wrong.

Congress could, of course, preserve the mandate and toughen enforcement. While progressive policy analysts may talk privately about getting tough with non-compliant Americans (bulking up IRS enforcement, increasing the penalties, garnishing wages, and so forth), the law’s advocates in Congress have not shown the intestinal fortitude to advance such proposals.

Instead, they are promising more government spending, heavier government regulation, and yet another government health plan—a “ robust public option”—to erode further the already-shrunken choice and competition in the insurance markets.

Meanwhile, it’s absurd for Congress to preserve a law it will not enforce.

The real alternative to a government stick (the mandate tax) is a government carrot (regulatory reform)—a friendlier market environment, free of coercion, and characterized by robust consumer choice and competition; a market where people want to buy an affordable product that they determine is of value to them.

Younger and healthier people should not be discouraged from entering the health insurance market by government policy that limits their options and deliberately drives up their health insurance costs—policy that makes coverage unaffordable and undesirable.

Repealing the individual mandate penalty is sound policy. It is, however, only the first step in a hard process of carefully crafting insurance market reforms and allowing new health insurance markets to flourish—markets where individuals and families will control their health care dollars and decisions.

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Senate Should Repeal Regressive Tax on the Uninsured

Senate Democrats who fret over the distributional effects of tax cuts should thank their GOP colleagues for giving them the chance this week to vote on repealing one of the most regressive taxes: the Obamacare tax on the uninsured.

This tax disproportionately falls on those with incomes less than $50,000, while exempting many households earning six-figure salaries. Many who qualify for subsidies will have to choose between paying the tax and buying policies that offer shabby coverage with onerous deductibles that could stick them with big medical bills.

This wasn’t the way the so-called individual mandate was supposed to work. Obamacare’s architects theorized that threatening young and healthy uninsured people with a tax penalty would induce them to buy a product they didn’t want. They expected a big influx of younger people to pay premiums and file few claims, creating a stable market with affordable premiums.

Millennials spoiled this dream. Their enrollment rates disappointed expectations, roiling insurance markets and driving premiums higher.

That, coupled with President Donald Trump’s decision to discontinue unappropriated cost-sharing reduction payments to insurers that a federal judge ruled were unconstitutional, drove insurers to hike their 2018 premiums even higher.

Most of these increases fell on Silver plans, creating a dilemma for many people eligible for premium subsidies. The perverse result is that many subsidy-eligible people end up being subject to the mandate, while many with much higher incomes are not.

Consider a 31-year-old who earns $32,000. She would qualify for an average subsidy of nearly $2,500, according to the Kaiser Family Foundation’s premium calculator.

She would have several choices. She could buy a Silver plan at an average annual premium net of subsidies for a little more than $2,700.

Alternatively, she could pay less (an average annual premium of around $1,200, net of subsidies) for a Bronze plan. But deductibles in Bronze policies average nearly $5,900, requiring her to shell out more than $7,000 (22 percent of her income) for premiums and deductibles before her coverage fully kicks in.

Her third option is to remain uninsured and owe a tax penalty of $695.

Now consider a 31-year-old couple with income of $80,000, too much to be eligible for a subsidy. A Silver plan would cost them an average of nearly $10,500. A Bronze plan would be more affordable (average premium of around $7,400).

But since the Bronze plan premium exceeds 8 percent of their income, Obamacare exempts them from the tax penalty, unlike the 31-year-old single woman who earns far less.

This 8 percent threshold shields even households with six-figure incomes from the Obamacare tax penalty. A 45-year-old couple with income of $115,000 can forego coverage without tax consequences. A 55-year-old couple earning a combined $177,000 also would be exempt from the penalty.

It’s little wonder that an analysis by the office of Sen. Steve Daines, R-Mont., of IRS data found that four out of five people who paid the penalty for the 2015 tax year had incomes below $50,000.

For millions in that income category, Obamacare premium subsidies are a mixed blessing. Because those subsidies hold premiums below the 8 percent threshold, they are subject to the penalty if they don’t enroll. Households with much higher incomes, meanwhile, are exempt.

The individual mandate is a failed and regressive policy. It has neither stabilized markets nor kept premiums affordable, and it falls most heavily on households in the bottom two income quintiles.

Those looking for regressive taxes to repeal need look no further.

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Why Eliminating Obamacare’s Individual Mandate Should Be Part of Tax Reform

Obamacare’s individual mandate survived the Supreme Court’s 2012 ruling on the Affordable Care Act solely because the court interpreted the insurance requirement as a “tax.”

But now that Republicans in the Senate have included repealing—or zeroing out—this “tax” as part of tax reform, Democrats are crying foul play, accusing Republicans of trying to wrongly include their health care goals in tax reform.

As a “tax,” it makes sense for Congress to address Obamacare’s individual mandate within the context of tax reform.

“The individual mandate cannot be upheld as an exercise of Congress’s power under the commerce clause,” Chief Justice John Roberts wrote in the Supreme Court’s decision, because Congress can only regulate interstate commerce—not order individuals to engage in it. Roberts added:

In this case, however, it is reasonable to construe what Congress has done as increasing taxes on those who have a certain amount of income, but choose to go without health insurance. Such legislation is within Congress’s power to tax.

A primary goal of tax reform is to let Americans keep more of their own hard-earned money. After all, most Americans will agree that they can spend their own money better than government can.

Zeroing out the individual mandate would put between $695 and $13,100 of individuals’ and families’ earnings back into their pockets if they decide it is not beneficial for them to purchase the type of health insurance that Obamacare requires.

Tax reform is also about reducing the government’s undue influence over people’s personal choices, so that they are freer to work, invest, and spend more of their own money based on what’s best for them.

For many individuals, buying overpriced and highly regulated health insurance through Obamacare is not a sensible use of their hard-earned money. That’s why, according to the IRS, 6.2 million Americans decided to pay Obamacare’s uninsured penalty, or “tax,” in 2015; and 12.7 million obtained exemptions from it. Another 4.3 million people refused—without consequence—to tell the Internal Revenue Service whether or not they have insurance coverage.

The Congressional Budget Office estimates that repealing or zeroing out the individual mandate penalty would increase the number of uninsured individuals by 13 million in 2027, but less than half of that increase—5 million—would come from people abandoning their individual and Obamacare plans. Another 5 million would drop their virtually free Medicaid coverage, and 2 million would choose to give up their employment-based coverage. (Figures don’t add due to rounding.)

Those decisions are for individuals to make, absent government-imposed penalties or “taxes” on their personal choices.

The individual mandate has a particularly disparate impact on lower-income Americans. Of those who paid the individual mandate penalty in 2014 and 2015, 42 percent were families making less than $25,000 a year, and 82 percent made less than $50,000 a year.

Since this is a regressive “tax” that forces individuals to buy something they don’t want, tax reform aimed at providing lower- and middle-income tax relief is the perfect place to fix the problem.

Congress should eliminate Obamacare’s “tax” on uninsured individuals and use the additional $338 billion in revenues to reduce rates across the board, so that all Americans can keep more of their own money.

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How Fewer Obamacare Options Hurt a 4-Year-Old

Forget good intentions. Remember bad results.

The Washington Post recently published a heart-wrenching story of two Virginia families caught up with the consequences of a damaged, declining and increasingly noncompetitive health insurance market.

Little Collette Briggs, 4, suffers from an aggressive case of leukemia, and the Briggs family for two years has depended upon the medical professionals at a hospital that specializes in pediatric cancer care.

The family’s insurer has withdrawn from the market, and the remaining insurer has no contract with that hospital.  Narrow networks of doctors and hospitals have been a common feature of health insurance offerings in the declining and increasingly noncompetitive Obamacare insurance exchanges.

The Briggs family misfortune is hardly an isolated phenomenon. As the Post reported, “It is not uncommon for insurers to cut larger research-based hospitals from its plans on the exchanges as a way to cut costs. By narrowing their networks, carriers avoid paying the higher rates that academic medical centers charge.”

By virtue of its flawed design and inflexible regulations, the evolution of narrow health insurance networks—restricted insurance contracts with doctors and hospitals—was, among other big bugs, baked into Obamacare from its inception.

The historical record is clear. Examining the initial data in 2014, the first full year of Obamacare’s implementation, the Congressional Budget Office (CBO) reported that the plans in the health insurance exchanges nationwide had “narrower networks” than CBO analysts had anticipated, and the plans in the exchanges were also imposing “tighter management” on the use of medical services, compared with employer-sponsored health insurance.

In 2015, Avalere, a prominent research organization, reported that Obamacare plans included 34 percent fewer medical providers than the average for commercial private health insurance.

Likewise, researchers with the Robert Wood Johnson Foundation reported that among the “silver plans”—the benchmark plans, or the most popular plans on the Obamacare exchanges—41 percent of them had small or “extra-small” networks of medical professionals.

Restricting the availability of medical providers or services is just one way for insurers to stay in these so-called Obamacare “markets.” These “markets” are the way they are, however—beset by soaring costs and declining competition—because of Washington’s deliberate political decisions.

Obamacare transfers vast regulatory authority from the states to the federal government. The federal government is mandating the kind and level of health benefits Americans must get, the levels of coverage Americans must have, and the array of insurance rules that govern “private” health plans in the Obamacare “markets,” including the rating rules for insurance.

This complex set of federal regulations drove up the costs of health insurance coverage for millions of Americans in the individual and small-group markets.

Once again, the historical record on costs is clear: Compared with 2013, insurance premiums for 27-year-olds in 11 states more than doubled, and in 13 states, premiums for 50-year-olds increased by more than 50 percent.

In 2015, premium increases slowed, but in 2016, they climbed again. For 2017, the Department of Health and Human Services projected an average national premium increase of 25 percent in the exchanges.

The result: Younger and healthier persons are staying away from coverage in the exchanges in droves. With an older and sicker insurance pool, costs soar.

For next year, by the way, Health and Human Services is projecting that the average increase for the “silver plans” will be 37 percent.

On choice and competition, the historical record is also indisputable. In 2014, Kaiser Family Foundation analysts declared, “The long-term success of the exchanges and other ACA provisions governing market rules will be measured in part by how well they facilitate market competition, providing consumers with a diversity of choices and, hopefully, lower prices for insurance than would have otherwise been the case.”

The Kaiser Family Foundation analysts were dead right on that one.

Today, being able to pick among a broad choice of health plans and providers is, for millions of Americans, rapidly becoming a rarity—and not just for the beleaguered Briggs family in Virginia. Between 2013 and 2014, the number of insurers offering coverage in the nation’s individual markets declined by 29 percent.

By 2017, consumers in 70 percent of U.S. counties have only one or two insurers offering coverage in the exchanges. By 2018, it is likely to be worse.

The verdict is in. President Obama and his allies in Congress created this mess—from the very beginning. The soaring costs, crazy deductibles, declining choice and competition, along with the increasingly narrow networks, are a direct result of bad policy.

That’s why the Senate needs to get back to work and quickly undo Obamacare’s damage, allow the growth of functional insurance markets, and provide millions of Americans with more choice, a broader range of health care options and lower costs.

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We All Could Get Tax Cuts If Congress Repeals Obamacare Mandate to Lower Rates

The Senate should be commended for including repeal of Obamacare’s individual mandate in its tax reform plan. Repealing the mandate that forces individuals to buy health insurance would provide tax relief to millions of Americans who can’t afford the rising costs of Obamacare and otherwise would be subject to the tax penalty.

The Congressional Budget Office estimates that over 10 years repealing the mandate would increase federal revenue by $338 billion. This additional revenue should be used to lower tax rates for all Americans, not used to expand special-interest credits and deductions.

Repealing the individual mandate can be good for tax reform. But more importantly, it is destructive and poorly designed health care policy. My Heritage Foundation colleagues Whitney Jones, Marie Fishpaw, and Edmund Haislmaier explain in a recent commentary for The Daily Signal:

The individual mandate is Obamacare’s requirement that every American enroll in health insurance or be fined. The idea was to push lots of healthier people—who didn’t need or want Obamacare’s expansive, overpriced coverage—to buy those plans in order to subsidize the cost of care for others.

But the experience with Obamacare over the last four years shows that the individual mandate does not work.

According to the most recent IRS reports, 6.2 million tax filers chose to pay the tax penalty rather than buy Obamacare insurance, 12.7 million tax filers obtained an exemption from the mandate, and 4.3 million tax filers omitted their health insurance status on their tax return.

In total, 23.2 million tax filers paid the fine, obtained an exception, or simply ignored the individual mandate.

They go on to explain that, up to this point, the IRS has not fully enforced the individual mandate. However, this coming tax year, Americans will be required to report health care coverage on their tax returns in order to receive a tax refund. Including repeal of the individual mandate in tax reform also allows Congress to cut taxes by another $338 billion over 10 years.

Congress should not use this new headroom to further increase any credits or special deductions. This seems to be what the Senate is proposing. The most recent changes to the Senate version of the Tax Cuts and Jobs Act would repeal the individual mandate but use the money to add another $350 to the child tax credit.

Rather than increasing the child tax credit or adding back in deductions for property taxes (as Sen. Rand Paul, R-Ky., has proposed), this money should be used to further lower tax rates on all Americans, not just a select few.

Repealing the individual mandate would provide relief to millions of Americans just when they are about to need it most. The full power of the IRS is about to start enforcing Obamacare’s tax penalty. Tax reform must address such a looming penalty.

Tax reform should repeal the individual mandate for numerous reasons. How Congress uses the additional revenue also will be important. Lawmakers should focus on further lowering tax rates, rather than adding to already burgeoning credits for select taxpayers.

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Senate to Add Obamacare Repeal to Tax Bill, and Some House Members Support, Too

As Congress works to pass tax reform by the end of the year, Senate Majority Leader Mitch McConnell, R-Ky., announced that a repeal of Obamacare’s individual health care mandate would be added to the Senate version of the tax bill.

“We’re optimistic that inserting the individual mandate repeal would be helpful,” McConnell said Tuesday, speaking about getting the bill passed. 

Sen. Mike Lee, R-Utah, called repealing the individual mandate a “fantastic” way to help working families. “By itself, repealing the individual mandate is good policy and good politics. It is one of the most unpopular parts of Obamacare,” Lee said in a statement provided to The Daily Signal.

Sen. Ron Wyden, D-Ore., announced his opposition to the repeal, saying it would “cause millions to lose their health care, and millions more to pay higher premiums, all to pay for more tax breaks for multinationals,” according to The Washington Post.

Conservative Sens. Rand Paul, R-Ky., and Tom Cotton, R-Ark., announced their support for repealing the mandate.

Neither the House or the Senate version of Republicans’ tax reform plan had originally included repeal of the Obamacare individual mandate, and the current House version still does not.

“I urge the House to include the mandate repeal in their tax legislation,” said Cotton in a statement, where he also said that repealing the mandate pays for more tax cuts for working families and protects them from being fined by the IRS for not being able to afford insurance that Obamacare made unaffordable in the first place.”

Republican Study Committee Chairman Rep. Mark Walker told The Daily Signal in an interview Monday that he thought House members would be favorable to adding repeal to the tax bill. “In the House, do I think it could pass? Yes,” Walker said. “From what I am hearing that we will move, a majority of our conference as well as senators, would be OK moving forward” with repeal.  

In a statement Tuesday, Walker said, “Adding the repeal of the individual mandate to tax reform could be the most consequential step this Congress takes to date in fulfilling our promises to the American people to both reform the tax code and repeal Obamacare,”

“We agree with President Donald Trump that it should be included,” he added.

Rep. Jim Banks, R-Ind., told The Daily Signal in an interview Monday that the House should vote to repeal the individual mandate as part of the tax reform plan.

“It does appear that there are Democrats in the House or the Senate who … are on board with the tax reform so [for] Republicans in the House [who] already voted once to repeal the individual mandate, there’s no reason why we couldn’t get 217 votes to do that again,” Banks said.

The top tax writer in the House, Texas Republican Rep. Kevin Brady, mentioned the possibility of the mandate repeal being part of tax reform Nov. 2.  “The president feels very strongly about including this at some step before the final process and he’s told me that twice by phone and once in person,” said Brady, the chairman of the House Ways and Means Committee.

On Wednesday, the Congressional Budget Office significantly revised its estimate on how much repealing the individual mandate in Obamacare would reduce deficits in the federal budget to $338 billion between 2018 and 2027, down from the $416 billion between 2018 and 2026.

Trump has made passing tax reform a goal of his first year in office and tweeted on Monday his support for repealing the individual mandate of Obamacare as part of tax reform.

“The president’s tweet … was a clear signal from the White House that he’s fully in support of repealing the individual mandate in tax reform,” Banks said, adding:

But even leading up to his tweet, there has been a lot of momentum and discussion via House and Senate members that that’s the right thing to do and it offers a great deal more in savings to give us room to do more within tax reform, so it’s a commonsense way forward with a lot of broad support among center-right members in the House and the Senate.

Trump also said Nov. 2 that the passage of tax reform would be “a big beautiful Christmas present,” for American taxpayers.

The House Republican tax plan, released Nov. 2 by Brady, House Speaker Paul Ryan, R-Wis., and other GOP members condenses the current seven tax brackets to three, nearly doubles the standard deduction, and caps the amount taxpayers can write off in state taxes at $10,000.

The Senate Republican tax plan, released Nov. 8, eliminates the state and local tax deduction and keeps the current seven brackets but lower rates.

Rep. Ted Yoho, R-Fla., said repealing the individual mandate within the tax plan would mean great relief for business people.

“I think it’s doable and I think it’s something we should do,” Yoho said in an interview with The Daily Signal, adding:

By getting rid of the individual mandate, you are going to see more people get on employer health care plans and you should see a drop of the overall cost of insurance.

Repealing the individual mandate could also advance Obamacare repeal if Congress decides to pursue it in 2018, Ed Haislmaier, a senior research fellow in The Heritage Foundation’s Center for Health Policy Studies, suggested in a statement to The Daily Signal.

“If the mandate is repealed as part of tax reform, then any related coverage effects will no longer be a factor the next time Congress takes up broader repeal and replace legislation,” Haislmaier said.

According to Investors Business Daily, about 8 million people faced penalties in 2016 for not complying with the Obamacare individual mandate.

According to The Intercept, Sen. Susan Collins, R-Maine, who announced she would not support a bill that partially repeals Obamacare in September, said at the time, “I have been strongly leaning no, but I wanted to have the estimate of the coverage problem confirmed by CBO before reaching a final decision.”

The Los Angeles Times also reported in September that “Collins’ announcement [on her Obamacare decision] followed the release of a preliminary CBO analysis of a bill sponsored by Sens. Lindsey Graham, R-S.C., and Bill Cassidy, R-La. The office predicted ‘the number of people with comprehensive health insurance that covers high-cost medical events would be reduced by millions.’”

Marie Fishpaw, director of domestic policy studies at The Heritage Foundation’s Institute for Family, Community, and Opportunity, said repealing the individual mandate as part of the tax reform package is overdue.

“This would provide relief to millions of Americans forced to either buy health insurance in a market broken by Obamacare’s mandates or pay tax penalties,” Fishpaw said. “While Congress still must provide broader relief from Obamacare’s costly insurance regulations, repealing the individual mandate in the tax bill would be a strong first step in the right direction.”

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Senate Makes Bold Move, Includes Repeal of Obamacare’s Individual Mandate in Tax Bill

News broke on Tuesday that the Senate will include repeal of Obamacare’s individual mandate in its final tax bill.

This is something President Donald Trump has called for, and it’s exactly the right move.

It’s critical that Congress take every opportunity to undo Obamacare’s damage. Repealing the individual mandate is a great place to begin the necessary work of undoing Obamacare regulatory burdens and tax increases that have driven up costs and reduced plan value and availability .

The individual mandate is Obamacare’s requirement that every American enroll in health insurance or be fined. The idea was to push lots of healthier people—who didn’t need or want Obamacare’s expansive, overpriced coverage—to buy those plans in order to subsidize the cost of care for others.

But the experience with Obamacare over the last four years shows that the individual mandate does not work.

According to the most recent IRS reports, 6.2 million tax filers chose to pay the tax penalty rather than buy Obamacare insurance, 12.7 million tax filers obtained an exemption from the mandate, and 4.3 million tax filers omitted their health insurance status on their tax return.

In total, 23.2 million tax filers paid the fine, obtained an exception, or simply ignored the individual mandate.

And with good reason—the products they were being forced to buy were from a private market broken by Obamacare’s many regulatory mandates. Plan prices skyrocketed and plan quality and availability dropped.

In the face of this situation, many Americans had to choose: Do I buy an overpriced product that doesn’t meet my needs, or do I pay a tax penalty and look for other alternatives?

With costs for plans continuing to rise, and possibly outpacing the ability of individuals to pay, it’s likely that a growing number of individuals will determine that it’s better to pay the penalty than pay for overpriced coverage.

And pay they will. Until now, the IRS has been lax in its enforcement of the mandate. However, this upcoming tax year the IRS will begin to actively enforce the individual mandate by requiring proof of health insurance coverage.

In previous years, Americans have been able to omit reporting health care coverage and still receive a tax refund. No longer will this be the case.

Moving forward, the IRS will refuse the submission of a tax return unless it includes proof of coverage, a coverage exemption, or payment (read: tax) for lack of coverage.

Repealing the individual mandate would provide relief to millions of Americans who have to either buy a health insurance product they don’t want, or pay tax penalties.

It’s possible that coverage numbers would go down at least somewhat after repealing the individual mandate. But that wouldn’t be because people are being kicked off of coverage. It would be because some Americans will either drop plans that are a bad deal for them, or not buy those plans in the first place.

Rather than forcing people to buy coverage that government bureaucrats think they should have, lawmakers should focus on creating market conditions that allow Americans to buy plans that they actually want.

That requires Congress to roll back the broken Obamacare regulations that are driving up the cost of insurance for millions of Americans—including the benefit mandates, actuarial value standards, and rating restrictions that drive up the cost of premiums.

Moreover, if Congress wants to encourage people to buy coverage rather than force them to do so, it could provide regulatory relief to the states to give them options to reward healthy individuals for buying and keeping continuous coverage.

Congressional leaders need to get back to work to undo Obamacare’s damage, and the Senate is leading the way by placing the individual mandate on the chopping block.

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Conservative Senator Renews Calls for Transparency After CBO Revises Obamacare Mandate Estimate

The Congressional Budget Office significantly revised its estimate on how much repealing the individual mandate in Obamacare would reduce deficits in the federal budget.

“I feel like I’m trapped in a game of Calvinball,” Sen. Mike Lee, R-Utah, said in a statement. “Just a few months ago the CBO had us playing by one set of rules for debating health care policy and now we are being told those rules have been completely changed for tax policy. This is simply unacceptable.”

Earlier this year, CBO had said repealing the Obamacare mandate would reduce deficits by $416 million. In the revised estimate, released Wednesday, it predicted it would reduce the deficit by $338 billion.

Rep. Kevin Brady, R-Texas, said Friday that Republican’s tax plan unveiled Nov. 2 could potentially include a repeal of the individual health care mandate in Obamacare.

CBO director Keith Hall said the CBO would estimate that repealing the individual mandate in 2019 would “reduce federal budget deficits by $338 billion between 2018 and 2027 relative to CBO’s most recent baseline.”  He also wrote on the agency’s website:

The agencies are in the process of revising their methods to estimate the repeal of the individual mandate. However, because that work is not complete and significant changes to the individual mandate are now being considered as part of the budget reconciliation process, the agencies are publishing this update without incorporating major changes to their analytical methods.

In December 2016, the CBO estimated that repealing the individual mandate and other provisions such as marketplace subsidies would reduce deficits in the federal budget by $416 billion between 2018 and 2026.

Lee said to counter the CBO’s lack of transparency, Congress must pass the CBO Show Your Work Act of 2017.

The Act, according to Lee’s office, would “require the CBO to publish its data, models, and all details of computation used in its cost analysis and scoring.”

The CBO would be able to retain its function as official scorekeeper of congressional budget proposals, however “the American people and the economic community would be able to see what’s going on in all those spreadsheets and algorithms,” according to Lee’s office.

The bill, which Lee introduced in August, currently has 14 co-sponsors including Sens. Roy Blunt, R-Mo.; Ben Sasse, R-Neb.; Tom Cotton, R-Ark.; Ted Cruz, R-Texas; Steve Daines, R-Mont.; Jim Inhofe, R-Okla; Ron Johnson, R-Wis.; James Lankford, R-Okla.; Rand Paul, R-Ky.; David Perdue, R-Ga.; Jim Risch, R-Idaho; Pat Roberts, R-Kan.; Mike Rounds, R-S.D.; Marco Rubio, R-Fla.; and Roger Wicker, R-Miss.  

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The Ugly Consequences of Single-Payer Health Care

The late, great Nobel Laureate economist Milton Friedman said it best: “There’s no such thing as a free lunch.”

Friedman’s pithy proverb reminds us that there is also no “free health care.” It’s a timely reminder, as Sen. Bernie Sanders, I-Vt., is making a public push for his “Medicare for All” bill.

While liberals have long advocated “single-payer” systems for health care, what’s new this time is that they are coalescing around a plan. Sixteen Senate Democrats are co-sponsoring Sanders’ bill, and 120 Democrats in the House have signed on to a similar approach.

Free Care?

This latest push for “single-payer” features the provision of “free health care” at the point of service from doctors, hospitals, and all other medical institutions.

The Sanders bill provides a comprehensive set of medical benefits and services, combined with “first dollar” coverage and outlaws all patient “cost sharing,” meaning no deductibles, no co-insurance, no copayments of any kind. Zero.

Sounds great, right? Well, P.J. O’Rourke, a prominent political humorist, improves on Friedman: “If you think health care is expensive now, wait until you see what it costs when it’s free.”

Make no mistake: If Americans were ever foolish enough to take Sanders’ “single-payer” prescription, they would suffer a fiscal fever the likes of which they have never even imagined.

>>> Read the full Heritage Foundation analysis of Sen. Sanders’ bill.

Last year, two separate analyses—one from the Urban Institute and another from Professor Kenneth Thorpe at Emory University—outlined in dreadful detail the fiscal consequences of Sanders’ 2016 proposal.

Though the analysts differed on their assumptions and calculated conclusions based on different models, they both came to the same conclusion: The Sanders “single-payer” bill is going to cost the American people far more than the senator and his academic and congressional allies claim, and the taxes to finance this massive enterprise are going to be huge.

Last year, Sanders estimated that over 10 years (2017 to 2026), new federal spending for his “Medicare for All” proposal would amount to $13.8 trillion.

By getting rid of all private insurance, including the unnecessary marketing and administrative costs and simplifying the system by junking today’s public-private mélange of payment and delivery, ordinary Americans would see big savings compared to their current health care spending.

Well, not quite. Thorpe, a former policy advisor to President Bill Clinton, projected that the full, 10-year cost of the plan would be $24.7 trillion.

Scholars at the Urban Institute, a prominent liberal think tank, estimated a stunning 10-year cost of $32 trillion. According to the Urban analysts, the Sanders plan would come up $16.6 trillion short of the revenues necessary to full pay for it. Socialism is expensive.

‘Feeling the Bern?’

While the Urban analysts did not model the tax impact of Sanders’ 2016 proposal, Thorpe did. He concluded that the senator’s 6.2 percent payroll tax, plus a 2.2 percent income-based premium tax, plus a whole series of special taxes on investments, dividends, “wealth,” and the hated “rich,” would not be sufficient pay for the program.

There are just not enough rich people to pay for socialized medicine.

Taxes would have to be higher—much higher. So Thorpe concluded that to fully finance Sanders’ plan, as the senator outlined it in 2016, would require a combination of higher payroll and income based premium taxes, amounting to a 20 percent tax on income.

As for the promised savings for ordinary Americans? Forget it. Taxes on working families would be substantial.

To fully fund Sanders’ single-payer plan, Thorpe estimated, 71 percent of working families would end up paying more than what they pay now under current law.

Loss of Freedom

There are other costs beyond the dollars and cents. As we have noted in a recent Heritage analysis of Sanders’ updated version of his bill, Americans would lose big chunks of their personal and economic freedom.

Recall that when former President Barack Obama was campaigning relentlessly for Obamacare, he promised—falsely—that, “If you like you like your health plan, you will be able to keep your health plan.”

In fact, under Obamacare, you never really had the freedom to keep what you liked. In 2013, on the eve of the very first year of Obamacare’s full implementation, 4.7 million health insurance policies were cancelled across 30 states, whether enrollees liked them or not.

Over the last three years, Obamacare’s health insurance costs exploded while personal choice and market competition collapsed. By 2016, Americans in 70 percent of U.S. counties were left with only one or two options.

Sanders and his 16 Senate Democratic colleagues deserve applause for their refreshing honesty. They make no pretense whatsoever that you can keep your health plan, regardless of your personal wants, needs, or preferences. You don’t count.

Under the Sanders bill, almost all private health insurance would be outlawed, including your employment-based health coverage. Today, nearly 60 percent of working-age Americans get their health insurance through private, employer-based plans.

Likewise, persons enrolled in existing government health programs—Medicare, Medicaid, and the Children’s Health Insurance Program (CHIP)—would be absorbed into the new government health plan.

The Sanders bill not only abolishes private plans in the Obamacare exchanges, but kills off the popular and successful Federal Employees Health Benefits Program which provides benefits to over 8 million current and former federal employees. For military dependents, TRICARE would also be gone.

Curiously, the scandal-ridden Veterans Administration program and the troubled Indian Health Services would remain. Of course, both are ideologically correct: They are “single-payer” systems.

The Sanders bill would concentrate enormous power in the health and human services secretary, far beyond the already expansive administrative discretion that the secretary exercises today under Obamacare.

The secretary’s power would extend to the establishment of a national health care budget for all health care spending, provider payment, standards for provider participation, and the quality of care delivery.

Taxpayer funding of abortion, among other things, would be compulsory, and, at least from the language of the text, it appears that there would be no traditional conscience protections for doctors and patients opposed to unethical or immoral medical procedures.

The bill would allow for very limited private contracting between doctors and patients for medical care outside of the government system.

If a doctor and a patient wanted to contract privately for medical services, the doctor would have to give up treating all other patients enrolled in the government health plan and receiving reimbursement from the government for one full year.

Curiously, such an absurd restriction on personal freedom does not even exist in Britain’s National Health Service, the granddaddy of socialized medicine, where doctors freely practice in both the government program and the private sector.

Sanders and his colleagues have outlined a clear direction for America’s health policy: a government monopoly with centralized power over American health care financing and delivery; a massive increase in federal spending combined with promised savings that will not materialize; enormous tax increases that will reach deep down into the working class; new restrictions on personal and economic freedom; and, for patients who want or need something new and better, virtually no avenue of escape.

Sanders and his colleagues have put their vision—profoundly authoritarian—into legislative form. It is touted in the media and elsewhere as a viable alternative only in the wake of the Senate Republicans’ monumental failure to come together and enact an alternative to Obamacare.

Sen. John Barrasso, R-Wyo., has recently asked the Congressional Budget Office to score the cost of the latest version of Sanders’ plan.

Meanwhile, the president and the Congress should explain to the American people how a patient-centered, market-based set of reforms will reduce health insurance costs, improve access to quality care, and expand their personal freedom.

In short, they should outline their vision—and fight for it.

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