Individual Mandate Repeal Would Save $300B, Raise Uninsured Rate
Repealing the Affordable Care Act's individual mandate would save more than $300 billion in federal health care spending over the next decade, but it also would increase premiums and the uninsured rate, according to Congressional Budget Office estimates released Tuesday, The Hill reports (Ferris, The Hill, 9/15).
Background
Under the ACA's individual mandate, U.S. residents who did not have health coverage in 2014 had to pay $95 or 1% of their incomes, whichever was higher, as they filed their 2014 taxes. The penalties will increase to $325 or 2% of individuals' incomes, whichever is higher, for those who do not have insurance in 2015 (California Healthline, 2/20). The penalty will increase again in 2016, to $695 or 2.5% of household income, whichever is higher.
Some Republican lawmakers have called for a repeal of the mandate through a fast-track budget process called reconciliation (Howell, Washington Times, 9/15).
CBO Estimate Details
According to CBO's estimates, government health departments would save about $311 billion over 10 years if the individual mandate were repealed.
Most of the savings would come from fewer U.S. residents seeking insurance subsidies through the ACA (The Hill, 9/15). If the individual mandate were repealed, CBO estimated that the federal government over the next decade would spend about:
- $200 billion less on Medicaid and the Children's Health Insurance Program (Washington Times, 9/15); and
- $110 billion less on subsidies for individuals purchasing coverage through the health insurance exchanges.
Meanwhile, the federal government would lose about $6 billion in revenue from penalty fees paid by individuals who lack insurance, resulting in a net savings of about $305 billion.
However, CBO noted that repealing the mandate could cause health insurance premiums to increase by 20%.
In addition, CBO said repealing the mandate could raise the number of uninsured U.S. residents by about 14 million. If the individual mandate were repealed, CBO estimated that about:
- Eight million U.S. residents losing coverage would come from the individual insurance market;
- Five million individuals would drop Medicare or CHIP coverage; and
- One million would lose employer-sponsored health plans (The Hill, 9/15).