GOP tax plan could cripple Obamacare

Last Updated Dec 20, 2017 7:24 AM EST

With the GOP tax bill steaming toward President Donald Trump's desk, Republican lawmakers are on the verge of eliminating the part Obamacare they hate most: the individual mandate.

The House passed the tax overhaul on Tuesday afternoon; despite a procedural hitch that could require a second vote on Wednesday, the measure is expected to pass. The Senate approved the bill early Wednesday in a party-line vote.

To ensure that all consumers, including healthy people, buy health care coverage, the Affordable Care Act imposes a tax penalty on any eligible person who doesn't purchase insurance. The final tax bill revokes those penalties and, in turn, eliminates the mandate.

Republicans argue that ending the mandate will free consumers from an overly restrictive policy. "No longer will Americans be strong-armed into Obamacare health plans they do not want and cannot afford," said Rep. Kevin Brady, chairman of the House Rules Committee during a recent hearing.

But health care advocates, medical providers, actuaries and insurers worry that without the penalties even fewer healthy people will sign up for coverage than do already, causing more problems in the individual marketplace. The Congressional Budget Office estimated that without the mandate,  about 13 million more people would have no health insurance in 10 years.

So what exactly does the end of the individual mandate mean for consumers, many of whom likely just finished shopping for a plan on the ACA exchanges?

4 possible consequences

Confusion Many consumers are coming off an abbreviated and particularly hectic exchange open-enrollment period. They may not realize that the tax penalties aren't eliminated under the tax overhaul bill until 2019. That means people shopping for individual insurance who gave up on the process, perhaps thinking there would be no mandate, will still have to pay penalties for the 2018 tax year.

Potentially higher premiums No penalty for going uninsured may mean young, healthy consumers will simply forgo buying insurance, leaving the pool of insured largely filled with people having higher health care needs, according to insurers and the American Academy of Actuaries. This is even more pronounced because the ACA requires insurers to cover people with preexisting conditions, meaning unhealthy people can join the insured pool at any time.

Insurers argue that if they're left to cover only the most high-cost patients, they'll need to raise premiums, perhaps dramatically, to cover those costs. Even with the mandate, attracting healthy people to the insurance pools was difficult. Now, some insurers worry the system is set up so that only sick people will buy insurance.

Fewer choices With that situation in mind, many insurers may simply drop out of the individual market altogether. Throughout the past year or more, major insurers have exited the exchanges at a rapid rate because of cost pressures and uncertainty in the market. With no mandate, that trend is bound to continue, said Julie Rovner of Kaiser Health News in a recent report on NPR.  

Penalties of a different kind It's a long shot, but states may step in and create their own mandates to help the individual state marketplaces. Political opposition is strong, even in blue states, but that hasn't stopped California, Maryland and Washington, D.C., from having public discussions about enacting state mandates.