Republicans on Capitol Hill aim to enact major tax and healthcare reforms by year’s end.
After several attempts to pass healthcare reform failed earlier this year in Congress, Republicans in the Senate passed a tax bill early Saturday that includes significant changes to the existing healthcare system.
The most prominent change to healthcare is the repeal of the individual mandate that Americans obtain health insurance or face a penalty. Currently, those without insurance must pay a $695 fine or 2.5% of their income, whichever is larger. The provision is one of the most crucial and controversial aspects of the Affordable Care Act (ACA), commonly called “Obamacare.”
Senators justified including the mandate’s repeal in the tax reform bill by citing Chief Justice John Robert’s majority opinion in National Federation of Independent Business v. Sebelius. In the 2012 case, which upheld most aspects of the ACA, the Supreme Court interpreted the mandate as a valid provision authorized by Congress’s power to lay and collect taxes.
Political observers and healthcare industry stakeholders immediately began to examine the potential implications of the proposed changes. The ACA, through numerous legislative and judicial challenges, has been the nation’s predominant healthcare policy since its passage in 2010. More than 20 million Americans have gained health coverage.
The Congressional Budget Office (CBO) released a revised estimate Monday on the impact of repealing the individual mandate. Federal budget deficits would decrease by $338 billion from 2018 to 2027, while 13 million people would lose their health insurance coverage, the CBO said.
The estimates also revealed a stable forecast for insurance companies in most areas of the country for the next decade as well as a 10% increase in premium costs per year through 2027. The CBO stated the reduction of the penalty while maintaining the individual mandate would yield similar results.
Most healthcare organizations must now anticipate how such dramatic changes to policy will affect their clientele and their bottom line. Some outside experts agree with the CBO’s findings on eliminating the individual mandate penalty, arguing that young, healthy citizens will be less likely to sign up for insurance.
Duke University health policy researcher David Anderson told The Hill that the repeal of the mandate “is not catastrophic,” though it will likely result in higher premiums and some insurers dropping out of the market, leaving consumers with fewer options.
The lack of healthy people to supply funding for the insurance pool could destabilize an already vulnerable marketplace. A recent data analysis by the Los Angeles Times found the individual mandate repeal could have an especially detrimental impact on rural markets nationwide.
Sen. Susan Collins, R-Maine, said Friday that she secured Senate Majority Leader Mitch McConnell’s support for the Alexander-Murray healthcare bill and a second legislative package to stabilize individual insurance exchanges as well as provide $5 billion to lower premiums and reinsure high-cost plan members, as Business Insider reported.
The tax reform legislation must go through conference between both houses before President Trump can sign it into law. The House’s tax reform bill lacked a provision to repeal the individual mandate, which is likely to be included in the final version of the legislation.
Trump said he wants to sign the law by Christmas.
Jack O'Brien is the Content Team Lead and Finance Editor at HealthLeaders, an HCPro brand.