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The GOP tax bill guts Obamacare and will leave more people uninsured

The end of the individual mandate means health insurance rates will rise for everyone else.

by Alex Lubben
Dec 19 2017, 9:08pm

The House of Representatives passed the Republican tax plan Tuesday, a $1.5 trillion package of permanent tax cuts for corporations and temporary ones for some individuals. The Senate is expected to follow suit this afternoon, and send the bill to President Trump’s desk.

But aside from lowering corporate tax rate to 21 percent from 35 percent, and the rate on America’s wealthiest individuals to 37 percent from 39.6 percent, the bill is a sweeping re-write of the Obama-era health law Obamacare, which required required that all Americans purchase health insurance.

The Republicans could not repeal the Affordable Care Act earlier this year so this is the next best thing: repealing the so-called "individual mandate" which levied a tax penalty on people who choose not to buy health insurance, a provision which helped insurance companies spread the cost of caring for the sick to the healthy.

The mandate has always been unpopular. President Barack Obama only reluctantly added it to the ACA; he’d initially campaigned on a plan that didn’t punish people who didn’t have insurance. So did Mitt Romney’s healthcare reform package in Massachusetts. And one the consequences of its repeal, the Democrats and insurance companies agree, will be higher premiums.

The people who opt out of being insured will likely be the young and healthy — or, insurance companies’ best clients. When those who require the least amount of care go uninsured, the costs will go up on the rest of insurance companies’ clients.

“We are concerned about the inclusion of the individual mandate repeal and the consequences that this would pose to our patients,” said Rick Pollack, the President and CEO of the American Hospital Association on Friday in a press release. “It is unfortunate that the important task of overhauling the tax code will erode health coverage for many.”

The nonpartisan Congressional Budget Office estimates that, without the mandate, four million people will lose health insurance by 2019, and 13 million will lose it by 2027, and that premiums will rise by 10 percent.

“By repealing the individual mandate at the heart of Obamacare, we’re giving you and your family the freedom to choose the healthcare plan that’s right for you,” House Speaker Paul Ryan said on the floor of the House of Representatives on Tuesday afternoon.

There’s a deficit boon for the GOP on the individual mandate: Repealing it would save the federal government some $338 billion over the course of the next decade, according to the Congressional Budget Office. But those savings are largely the result of more people not receiving federal subsidies on medical care, because, ultimately, fewer people are insured.

The tax bill, which passed the House on Tuesday afternoon and expected to pass the Senate on Tuesday night, gained the support of even those Republican Senators reluctant to support the GOP repeal and replace plan for Obamacare.

“Eliminating the tax penalty does not take care away from anyone,” Senator Lisa Murkowski, who voted against the Republican healthcare plan, told reporters. “Instead, it provides important relief to those who have been penalized for choosing not to buy unaffordable insurance.”

Still, it’s what’s not clear is exactly how effective the mandate is for getting people to sign up for healthcare in the first place. It’s a pretty low fine, capped at $695, or 2.5 percent of income, whichever is higher. That’s still far less than what most people would spend on health insurance in a year, and so its effect on enrollment could be overstated.

"The penalties are in the hundreds of dollars and the cost to insurance for a family could be in the tens of thousands,” Elisabeth Rosenthal, editor-in-chief of Kaiser Health News, told VICE News. “It’s not clear that the penalty was a big incentive to buy or not to buy.”