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| Congressional Republicans Reconsidering Individual Mandate Repeal in Tax Reform |
House Republican leadership announced this week that they are considering adding an amendment to their tax reform plan that would repeal the ACA’s individual mandate penalty. They had initially said that they purposefully did not include any major changes to health reform, such as a repeal of the mandate penalties, opting to address those in a separate legislative package. But requests by President Donald Trump and more conservative-leaning Republicans have led party leaders to reconsider addressing the mandate through an amendment. Repealing the penalty is expected to provide much-needed offsets for tax reform, projected at roughly $338 billion over 10 years, but could complicate support for the package among moderates who don’t want to create additional instability in the individual market. NAHU is actively monitoring the tax-reform efforts as they relate to healthcare and health insurance and will continue to advocate on behalf of brokers and your clients.
The Congressional Budget Office released a report on Wednesday projecting that repealing the individual mandate penalty would reduce the federal deficit by $338 billion between 2018 and 2027. The analysis concludes that while the federal government would not receive tax revenues from those who don’t pay the mandate, it would be more than offset by the reduced spending on advanced premium tax credits for individuals to purchase coverage. The tradeoff of the reduced healthcare outlays would be a net increase of the uninsured by roughly 13 million by 2027 and a 10% increase in health insurance premiums, both of which could complicate efforts to repeal the provision. The CBO’s report comes nearly a year after a similar analysis found that repealing the individual mandate would reduce the federal deficit by $416 billion over a decade.
This week, Representative Jim Renacci (R-OH) joined those calling for a repeal of the individual mandate penalty, becoming the first member of the House Ways and Means Committee to do so. Renacci will be a critical vote for advancing the legislation and he is expected to introduce an amendment to the tax-reform package to repeal the mandate penalties. However, Representative Kevin Brady (R-TX), who chairs the Ways and Means Committee, has not indicated he would be willing to advance such an amendment.
Repealing the mandate penalties would come with both political advantages and disadvantages for advancing tax reform. Many of the most fiscally conservative Republicans have expressed discontent with the initial tax-reform estimate of adding $1.5 trillion in new federal debt, so reducing that number by $300 billion+ should help sway some of these votes. However, other Republicans who oppose tax reform adding anything to the debt are unlikely to budge. But repealing the penalties could also help bring along Republicans who have been pushing for ACA repeal, as eliminating the ACA’s individual mandate could wreck havoc in the individual marketplace as healthy consumers opt not to enroll without the penalties in effect, potentially leading to a death spiral. Therefore, repealing the individual mandate penalties could effectively be as powerful as repealing the law itself and would satisfy the campaign pledge—more than seven years running—to repeal the ACA.
The other side of this argument is that including a repeal of the penalties would detract many of the moderates who were reluctant to support earlier ACA repeals this year. The House version that passed in May was done so by the slimmest of margins, 217 to 213. But as many as 20 Republicans who voted in favor expressed significant reservations about the legislation, only voting for it in order to advance it to the Senate. Many of these members are moderates who represent suburban and exurban swing districts and have constituents who are vocal about not causing any additional instability for their marketplace coverage. And in the wake of this week’s elections, particularly in Virginia, where a plurality of voters cited healthcare as their top issue and of those three out of four voted for the Democrat, congressional moderate Republicans may find themselves increasingly vulnerable and unlikely to support major ACA changes.
Republican leadership has not made a final decision on whether they plan to vote on a repeal of the mandate penalty as they weigh its tradeoffs. Republicans are eager to advance a sweeping legislative proposal that can be enacted into law, but can only afford to lose a small number of votes to do so. The budget resolutions to set up tax reform had already been passed by very narrow margins, 216-212 in the House and 51-49 in the Senate, meaning the baseline leaves little room for error. And weary of repeating the failures to pass healthcare, leadership may want to avoid reopening the healthcare debate that could stall tax reform the same as healthcare, and potentially leave Republicans with no major legislative victories despite unified control of both houses of Congress and the presidency. Therefore, their initial hesitation to repeal the mandate may be the safest move politically.
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