Alexander-Murray Legislation Can’t Undo the Severe Harm Resulting From Individual Mandate Repeal
Senate Republican leaders have released a new version of their tax bill that adds a provision repealing the Affordable Care Act's individual mandate, the requirement that most people enroll in health insurance coverage or pay a penalty. Some
Repealing the individual mandate would:
* Increase individual market premiums by about 10 percent, according to recent
* Create further instability for the individual market, especially in the near term.
* Increase the number of Americans without health insurance by millions beginning in 2019, when the mandate would be repealed, reaching 13 million by 2025, according to CBO.
Senators Alexander and Murray negotiated their bill in good faith, as a compromise effort to reduce individual market premiums and increase market stability. But
Moreover, once the savings from individual mandate repeal are dedicated to corporate tax cuts -- as
Impact of Repealing the Mandate and Passing the Alexander-Murray Bill
The Alexander-Murray bill would undo almost none of the harmful effects of repealing the individual mandate on individual market premiums, market stability, or health insurance coverage.
Individual Market Premiums
The net effect of repealing the individual mandate and passing the Alexander-Murray bill would be a small reduction in silver plan premiums in 2019, higher premiums for all other plans beginning in 2019, and higher premiums for all plans beginning in 2020.(7)
The Alexander-Murray legislation would restore cost-sharing reduction (CSR) payments to insurers, but only through 2019. CSR payments reimburse insurers for the cost-sharing assistance (lower deductibles, co-insurance, and co-payments) they are required to provide to lower-income enrollees. Because this assistance is available only to consumers who enroll in silver plans, insurers in most states raised premiums for silver plans -- but not bronze, gold, or platinum plans -- to account for the
The Alexander-Murray bill would reverse only the premium increases resulting from the Administration's decision not to pay CSRs, and only for 2019.(11) In contrast, repealing the individual mandate would increase premiums in 2019 and beyond, and for all individual market plans, not just silver plans. Without the individual mandate, fewer healthy people would sign up for individual market coverage, increasing average costs. CBO estimates this would raise premiums by about 10 percent, while some major insurers have said they would have to raise premiums across the board by about 15 percent if the individual mandate were repealed or no longer enforced.(12) The premium increase would wipe out much of the 2019 silver plan premium reduction from passing the Alexander-Murray bill, while the Alexander-Murray bill would address none of the premium increases for other plans or in other years. (See Table 1.)
See table here (https://www.cbpp.org/research/health/alexander-murray-legislation-cant-undo-the-severe-harm-resulting-from-individual).
Individual Market Stability
The combined effect of repealing the individual mandate and passing the Alexander-Murray bill would be to substantially increase insurer uncertainty and confusion and the risk that insurers exit the individual market.
If it were adopted without other measures undermining the individual market, the Alexander-Murray bill's potential benefits for individual market stability would go beyond its direct effects. Enactment would show that
Moreover, the uncertainty created by permanent individual mandate repeal would far exceed the uncertainty alleviated by a short-term appropriation for CSRs. As the
Facing substantial uncertainty about how to price, some insurers might instead opt to simply exit the individual market altogether, reducing consumer choice or leaving some consumers without any options. Indeed, a number of insurers interviewed about the possibility of mandate repeal for 2018 said that it would lead them to "seriously consider" market withdrawal.(14)
Health Insurance Coverage
The Alexander-Murray legislation does not include any provisions -- such as increased marketplace subsidies -- that would undo the coverage reductions from individual mandate repeal. Thus, the net effect of repealing the mandate and passing the Alexander-Murray bill would still be a 13 million increase in the number of uninsured Americans, increasing the share of non-elderly Americans without health insurance from about 11 percent to about 16 percent. (See Figure 1.)
See chart here (https://www.cbpp.org/research/health/alexander-murray-legislation-cant-undo-the-severe-harm-resulting-from-individual).
CBO projects that, by itself, the Alexander-Murray legislation "would not substantially change the number of people with health insurance coverage."(15) Likewise, CBO predicted minimal coverage effects from simply restoring payment of CSRs.(16) That is in part because unsubsidized consumers would mostly switch from silver to bronze or gold plans, rather than dropping coverage, in response to CSR-driven silver plan increases. Meanwhile, enrollment in employer coverage and Medicaid is unaffected by decisions about whether to pay CSRs.
In contrast, repeal of the individual mandate would increase the number of uninsured Americans by 4 million in 2019, when it first took effect; 12 million by 2021; and 13 million by 2025, based on CBO estimates. In addition to large coverage losses in the individual market, repealing the mandate would also lead fewer people to take up employer coverage or Medicaid, partly because -- absent the mandate -- some low-income people would never learn they are Medicaid eligible.
Some
Using Mandate Savings for Tax Cuts Would Make Undoing Coverage Losses Nearly Impossible
Looking beyond the Alexander-Murray proposal, the harms from repealing the individual mandate would be hard to reverse in any subsequent vehicle. For example, some
The
Footnotes:
(1) See
(2)
(3)
(4) "
(5)
(6) See, for example,
(7) Silver plans are those with actuarial values of about 70 percent; these plans serve as the "benchmark" plans for setting premium tax credits.
(8) Even the minority of states that instructed insurers to increase premiums for all plans for 2018 to account for non-payment of CSRs may switch to instructing them to raise premiums for silver plans only for 2019. For a survey of state approaches, see
(9)
(10)
(11) For many subsidized consumers, the increases in silver plan premiums resulting from the Administration's decision not to pay CSRs will actually make gold and bronze plans more affordable than they otherwise would be. See
(12) For example,
(13)
(14) Interviews took place in
(15)
(16) In fact, CBO projected small coverage increases over time if CSRs are not paid. That's because, as noted above, not paying CSRs makes coverage more affordable for some subsidized consumers.
(17) For a more complete discussion of these issues, see
(18) See
(19) See
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