Donald Trump made the repeal of the Affordable Care Act, aka Obamacare, a key promise of his campaign, saying he’d deliver it on the first day of his presidency. Once in office, though, he learned things weren’t so easy: Despite having seven years to plan, Republicans in Congress have thus far failed to roll back Obama’s signature achievement. But they haven’t given up, and Trump’s executive branch has continued to undermine the law. Trump is reportedly planning yet another way to do so, with an executive order that would weaken the requirement that people purchase health insurance.
The requirement is known as the individual mandate; under this part of the ACA, everyone has to have health insurance or face a tax penalty. Requiring insurance coverage means that healthy people who don’t get insurance through work (and who might otherwise just go without) have to pay premiums that help insurers foot the bill for patients who use more healthcare services. Requiring everyone to have insurance expands the pool of coverage, which ultimately lowers people’s monthly premiums and, along with government subsidies, makes it more affordable for insurers to cover people with pre-existing conditions.
It’s a convoluted way of improving America’s byzantine healthcare structure, but despite many Republicans disingenuously pretending not to know how insurance works, the individual mandate is a key part of the ACA. Trump can’t simply repeal it himself, because it’s written into law—Congress could repeal it, but they’ve tripped over themselves trying to do so thus far.
Instead, as first reported in the Washington Examiner and confirmed by the Washington Post, the Trump administration has prepared an executive order that would allow more people to forgo insurance without paying a tax penalty. It would do so by broadening what’s known as the “hardship exemption” established by the Obama administration. (The White House denied to The Hill that such an executive order exists.) The Treasury Department can grant exceptions to the individual mandate for people who suffer financial setbacks, such as bankruptcy, natural disaster, or the death of a family member, or if a taxpayer would otherwise be unable to pay their utilities. In these cases, the penalty would be waived.
That penalty is currently $695 per adult and $347.50 per child; the total penalty per family can reach $2,085 or 2.5 percent of the family’s income, whichever is greater. According to the IRS, about 6.5 million taxpayers paid a fine in 2015 for not having insurance, though the penalty that year was lower—$470 per adult.
Broadening the hardship exemption would allow more healthy people to opt out of having insurance while suffering no tax penalty. Without those people in the insurance marketplaces, insurers will raise rates to cover their sicker pool of customers. Premiums will climb, and fewer people will be able to afford insurance.
The Congressional Budget Office (CBO) issued a report assessing the effect of repealing the individual mandate. It projects that doing so would mean 4 million fewer people would have insurance by 2019 and 13 million fewer people by 2027, and premiums would rise by 10 percent each year. The CBO says the results would be “very similar” if just the tax penalty was eliminated but the mandate remained part of the law. An executive order would only broaden the exemptions to paying the penalty but it's possible that the mandate will be repealed entirely. Here's how.
Republicans are looking to undermine the penalty as a kind of backdoor repeal of Obamacare—and as a way to save the federal government money. (Fewer people with health insurance means less money spent on insurance subsidies.) So far, they’ve have been unable to pass legislation to repeal the individual mandate. But they’ve signaled they might try to include repeal in their tax cut bill. House Speaker Paul Ryan told Fox News Sunday that “a lot of members are suggesting” that inclusion, but one Republican source told the Washington Post that including it would mean losing votes in both the House and the Senate.
According to the Examiner’s report, Trump’s executive order is on hold while Republicans hash out whether they can pass a tax plan that also repeals the individual mandate. If Congress again can’t agree on its preferred way to gut the Affordable Care Act, it’ll give Donald Trump one more avenue to undermine the law—and eventually force more people to pay higher premiums, or go without insurance at all.
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