Individual Mandate Repeal Might Save $311B

Forecasters who help Congress predict the effects of legislation say repealing the Patient Protection and Affordable Act (PPACA) individual mandate could reduce federal spending by about $311 billion over the period from 2016 through 2025.

Repealing the PPACA individual mandate could also cut federal revenue by about $6 billion, reducing the net effect to $305 billion in savings over the 10-year period, or about $30 billion savings per year.

That would amount to about 0.9 percent of the $3.5 trillion the U.S. federal government spends each year.

Analysts at the Congressional Budget Office (CBO) and the Joint Committee on Taxation (JCT) have published those estimates in a brief discussion of the effects of eliminating the PPACA provision that requires many individuals to have individual coverage or else pay a penalty.

Mandate repeal could also increase the number of U.S. residents who lack health coverage in 2025 to 41 million. If the current rules stay in effect, the number of uninsured people could be about 27 million, the analysts say.

If the forecast is correct, in 2025, the federal government might save about $2,000 in PPACA program costs per additional uninsured individual.

Mandate repeal could cut the number of people with Medicaid or Children's Health Insurance Program (CHIP) coverage by 5 million; the number of people with employment-based coverage by 1 million; and the number of people with individual coverage purchased either on or off the PPACA exchange system by 8 million, the analysts estimate.

The analysts assume when making those predictions that mandate repeal would increase the cost of individual coverage by about 20 percent over what it would be if the current rules stayed in effect.

About two-third of the savings would come from reductions in spending on Medicaid and CHIP, and about $110 billion would come from cuts in PPACA exchange coverage subsidies, the analysts say. The analysts assume that the increase in the number of uninsured people would have no material effect on other types of federal government spending, such as spending on subsidies to help hospitals care for uninsured patients, or spending on public health clinics that serve the uninsured.

In 2012, before any of the major PPACA commercial health insurance market changes had taken effect, CBO analysts predicted keeping the PPACA individual mandate would help cut nongroup premiums about 15 percent.