Congressional Republicans fulfilled their years-long promise to voters Wednesday by sending a bill to President Trump that would gut a provision in Obamacare requiring people to buy health insurance or pay a fine.
The individual mandate provision was one of the most unpopular parts of Obamacare and had previously withstood a Supreme Court battle as well as several repeal efforts in Congress.
Its proponents argued that it was crucial to encourage more young, healthy people to buy coverage who would otherwise choose to go uninsured. Its goal was to spur those customers to sign up to balance out the costs of more expensive enrollees, many of whom have preexisting illnesses.
For Republicans, the individual mandate has become a symbol of federal overreach. The law, they often say, obligates people buy health insurance that they don't want, cannot afford, or cannot use. Even Republicans who have said they want to fix Obamacare rather than gut it, such as Sens. Lisa Murkowski of Alaska and Susan Collins of Maine, have noted that they see a difference between a government mandate forcing purchase of health insurance and gutting provisions that would take coverage away from those who want it.
In the 1990s, the mandate had been part of a Republican alternative to Hillary Clinton’s healthcare plan, which had an employer mandate. It was later adopted as part of the Massachusetts healthcare law signed by Gov. Mitt Romney in 2006. But as former President Barack Obama and Democrats moved to pass it at the federal level, the requirement became emblematic to conservatives of the encroachment on liberty, as for the first time, lawmakers were requiring individuals to purchase a product, and one that met specifications established by the central government.
The individual mandate's constitutionality was challenged in the Supreme Court, which, in a narrow ruling, said it was lawful only on the grounds that it was a tax. That ruling established that people who went uninsured were in compliance with the law as long as they paid penalties.
That designation allowed Republicans to include the mandate repeal as part of a larger overhaul of the tax code, by reducing the penalties to $0 in their tax bill, which gave the effect of repealing the mandate.
The penalty will go off the books beginning in 2019. Until then, penalties are $695 per adult, or 2.5 percent of income, whichever is higher. The requirement for insurance companies to cover enrollees with pre-existing illnesses without charging them more remains in effect. Insurers have warned that to meet this requirement they will have to raise the costs of premiums or quit the exchanges altogether.
Trump signaled Wednesday that he believed repeal of the mandate penalties effectively helped gut much of the law, but raised the possibility of a stronger overhaul effort next year.
“When the individual mandate is being repealed that means Obamacare is being repealed ... We have essentially repealed Obamacare and we will come up with something much better," he said at a press conference.
While the rest of the healthcare law remains in place, including regulations on health insurance and the expansion of Medicaid in many states, Senate leaders have vowed to pass two bills aimed at stabilizing the law. One would fund a reinsurance program that would pay for the costs of more expensive enrollees, and the other would fund cost-sharing reduction subsidies that help insurers offer lower out-of-pocket costs to customers. Both bills are intended to reduce premiums.
The precise impact of the individual mandate on people who buy their own health insurance is an area of debate. The Congressional Budget Office has projected that 13 million more people would be uninsured in a decade, but has also said it is re-evaluating its methods. Standard & Poor's estimates the number of people with health insurance would fall by 5 million or fewer.
Some of its proponents say the mandate should have been stronger. The mandate contained a range of exemptions that were set up under Obama and the cost of coverage is more expensive than the penalty for people who do not receives subsidies to pay for premiums. About 80 percent of the roughly 29 million people who are still uninsured do not pay a penalty.
The American Academy of Actuaries recently acknowledged that the Obamacare penalty had not worked well, writing that "in practice, its financial penalty is usually low as a share of premiums, many individuals are exempt, and enforcement is weak."
Still, the group concluded that the mandate "increases enrollment above what it would otherwise be."