For Many Uninsured, ACA Coverage Costs Less Than Tax Penalty

More than half of the 10.7 million Americans who are uninsured and eligible for an Obamacare plan could pay less in premiums than what they would owe under the "individual mandate" tax for shirking coverage, nonpartisan policy analysts said Thursday.

The Kaiser Family Foundation said roughly 40 percent of those 5.8 million people could find a low-tier bronze plan for no cost at all, due to taxpayer-funded subsidies built into the health care law.

Among the customers who don't qualify for subsidies, only a tiny fraction would be better off — in purely financial terms — paying the tax than seeking coverage, analysts found.

The individual mandate is the most unpopular part of the 2010 health law, though President Obama included it to try and spur enough healthy people into the market to balance out sicker customers, who could no longer be denied coverage.

Its phased-in tax penalty — now at $695 per adult or 2.5 percent of qualified income — served as a weak prod in early rounds, resulting in a sicker-than-expected customer base and steadily rising premiums.

Obamacare's supporters want customers to brush aside President Trump's antipathy toward the wobbly program and seek out whatever bargains are available, so the law's economics improve and Democrats can bolster their case against repeal.

Many states were able to structure rate hikes tied to Mr. Trump's decision to cancel "cost-sharing" payments to insurers in a way that boosted premium subsidies, knocking down prices while Uncle Sam foots the bill.

Kaiser said 8.3 million of the 10.7 million eligible customers in its analysis would qualify for subsidies. Among this group, 70 percent could pay less for coverage than they would for the mandate tax, with 52 percent able to purchase a bronze plan at no cost.

Among the 2.4 million uninsured who don't qualify for subsidies, only 2 percent would be able to pay less in premiums than the penalty.

Republicans looking to repeal Obamacare next spring have highlighted this segment of the population, noting they face the difficult choice of paying exorbitant rates or getting taxed by the government.

Mr. Trump and some Republicans want to axe the mandate as part of the tax-code overhaul being debated in Congress.

Repealing the provision would erase its tax revenue, yet it would actually save money over time, because fewer people would seek coverage and draw taxpayer-funded subsidies that defray their premiums.

Mr. Trump says those savings could be used to provide even deeper tax cuts.

Repealing the mandate would save $338 billion over the coming decade, the Congressional Budget Office estimated Wednesday, though 13 million fewer people would hold insurance.

Some GOP moderates are wary of the projected coverage losses, so Republicans aren't sure if they want to inject the debate into their tax bill, which the party views as must-pass legislation.