The nonpartisan Congressional Budget Office recently warned Republicans that repealing some, but not all, of Obamacare could throw the health insurance market into turmoil.
The CBO estimates in a new report that if Congress and President Trump repeal Obamacare’s tax and spending provisions, but leave its insurance regulations in place, 18 million people would lose their insurance. Furthermore, premiums would spike 25 percent in just the first year.
CBO’s analysts based their estimates off of a repeal bill that the House and Senate passed in early 2016 that President Obama vetoed, called The Restoring Americans’ Healthcare Freedom Reconciliation Act. It would have eliminated Obamacare’s penalties for not buying insurance. In addition, it would phase out Obamacare’s subsidies that help low-income individuals buy insurance.
Without these carrots and sticks strong-arming individuals to buy Obamacare’s unaffordable insurance, CBO projects millions will drop their coverage:
“Eliminating the mandate penalties and the subsidies while retaining the [health insurance] market reforms would destabilize the nongroup market…Average health care costs among the people retaining coverage would be higher, and insurers would have to raise premiums in the nongroup market to cover those higher costs. CBO and [the Joint Committee on Taxation] expect that enrollment would continue to drop and premiums would continue to increase in each subsequent year.”
The CBO explained that similar state-level “reforms” substantially increased the cost of health insurance before Obamacare became law:
“Prior experience in states that implemented similar nongroup market reforms without a mandate penalty or subsidies has demonstrated the potential for market destabilization. Several states that enacted such market reforms later repealed or substantially modified those reforms in response to increased premiums and insurers’ departure from the market.”
Indeed, many states established Obamacare-like regulations that nearly destroyed their health insurance markets. Starting in 1992, the state of New York required insurance companies to charge sick customers the same premiums as healthy ones, a practice known as “pure community rating.” Then-Gov. Mario Cuomo considered these mandates a “forerunner of what we’ll be seeing nationally.”
Other states soon followed the Empire State’s lead and implemented price-fixing rules of their own. Massachusetts, Washington and New Jersey required insurers to charge older customers nearly the same premiums as younger customers.
While these states aimed to expand health care coverage to the sick, they winded up making health insurance less accessible for everyone. Community rating regulations significantly increased premiums and incentivized healthy individuals to drop their coverage. After New Jersey implemented these rules, premiums tripled and 50 percent of enrollees in the individual market cancelled their coverage. These regulations also reduced health insurance coverage in New York by 95 percent.
The CBO offered a timely reminder that Republicans need to repeal Obamacare the right way. There’s no question that Obamacare’s taxes and subsidies should be repealed or replaced. But if Republicans decide to preserve Obamacare’s insurance regulations, premiums will skyrocket, choices will disappear, and millions could lose their coverage.
Charlie Katebi is a contributor to the Washington Examiner’s Beltway Confidential blog. He is an advocate at Young Voices. Thinking of submitting an op-ed to the Washington Examiner? Be sure to read our guidelines on submissions.
