Mandate with Destiny

The old saying goes: nothing in life is certain but death and taxes.  But I think there’s one more thing we can be certain of these days and it’s that Republicans will never give up trying to dismantle Obamacare.speeding ambulance The drive to kill Obamacare has become so deeply ingrained in Republicans over the last 7 years that it’s almost instinctual at this point.  So you won’t be surprised to hear that there’s now arisen yet another effort to tear down the dreaded health care law.

However, this time, the primary driver of this effort is not actually the desire to kill Obamacare in and of itself.  The main motivation this time is an even higher calling for the Republican Party: the desire to give corporations and rich people big tax cuts.

But wait a minute, what does one have to do with the other?  Well, the procedural rules of Congress say that the Republican tax cut bill can’t increase the deficit by more than $1.5 trillion over the next decade (if they want to pass it with only 50 votes, which they do). But Republicans were actually having a hard time getting their tax cuts to stay within those guidelines.

So Republicans added a provision repealing Obamacare’s individual mandate to the Senate version of their tax bill.  Repealing the individual mandate will reduce the budget deficit by approximately $338 billion [PDF] over the next decade, according to the Congressional Budget Office (CBO).  That then gives Republicans an extra $338 billion to spend on their tax cuts.  Ta da, budget magic! Suddenly, it’s a lot easier for Republicans to keep their cuts under that $1.5 trillion cap.

So the mandate repeal helps Republicans pass the holy grail – their tax plan.  But surely they’re not crying about the fact that it also helps destroy Obamacare.  It’s not quite a full Obamacare repeal, but getting rid of the individual mandate will leave Obamacare very badly crippled. Here’s why: the reason the government will save the $338 billion is because, according to the CBO, 13 million fewer people would be getting health insurance over the next 10 years if the mandate is repealed.  The government will be spending less money on subsidies and Medicaid, since there will be fewer people getting insurance and therefore fewer people getting assistance with their insurance.

On top of that damage, CBO says that premiums will increase by 10% each year in most years throughout the next decade.  So for people who do keep their insurance, it will be exorbitantly expensive.  Additionally, the American Academy of Actuaries predicts that many insurers would leave the markets altogether because the customer base would become so unpredictable.  So in some markets, there may be no insurance options at all.

The reason that all of this will happen is that the individual mandate is one of the key, basic elements for making Obamacare work. People often describe Obamacare as a three-legged stool – take any one of the legs away and the stool can’t stand.  The three legs are: (1) ending discrimination for preexisting conditions; (2) the individual mandate; and (3) subsidies to help make insurance affordable.

Without the individual mandate bringing young and/or healthy people into the markets, the requirement that insurance companies take all comers (and that they don’t price discriminate based on health status) can’t work.  As the young and healthy drop out, the people who are left will be the ones who are most expensive to cover, and insurance will become increasingly expensive in response.

So even though the individual mandate may not be popular, it’s the thing that allows one of the bill’s most popular provisions – preexisting conditions protections – to work.  You can read about the individual mandate and how it interacts with the different provisions of Obamacare in more detail in this very good explainer from Vox.

In response to these figures about insurance loss, Republicans argue that the CBO numbers are misleading because all those people who will go without insurance will be choosing to do so.  That argument is flawed for 2 reasons.  The first is that while some will voluntarily drop coverage, many others will be forced to drop their insurance because it will become prohibitively expensive, for the reasons explained above.  The second has to do with behavioral economics – even many of those who choose to drop coverage will be worse off as a result – as explained here by Paul Krugman.

Additionally, Republicans argue that the CBO numbers aren’t even correct and that far fewer people will lose insurance due to the mandate repeal than CBO claims.  This may or may not be right – it’s possible that the CBO forecast will be off.  But if Republicans are right, and say, only half that number (6.5 million) lose insurance, then that means the deficit savings from the individual mandate repeal also wouldn’t be nearly as large.  And that would mean that the Republicans’ tax bill increases the deficit much more than they’re admitting.  So any way you look at it, they’re making a bad faith argument about their bill.

So that’s the bill.  Now let’s talk about the Republicans who appear ready to vote for this disaster.  Back in the fall, you probably remember, the Senate was on a mad dash to pass an Obamacare repeal bill after the House had already passed a bill of its own.  The Senate tried several different (increasingly desperate) formulations of the bill in an attempt to find something – anything – that could get 50 votes.  One version that they put forward was the “skinny repeal.”

Skinny repeal was essentially just a repeal of the individual mandate, along with a few other less glamorous provisions.  John McCain, Lisa Murkowski, and Susan Collins all voted against it.  However, this time around, as part of the tax bill, Murkowski and Collins have both indicated that they are on board with the mandate repeal (McCain has given no indications yet of where he stands on that specific provision or on the tax bill in general).

Each of these two Senators have given reasons why they are prepared to support the repeal at this time, but neither of their arguments are convincing, especially given their past opposition.  Murkowski wrote an op-ed in her home state paper explaining why she supports a repeal of the individual mandate.  She talked about wanting to give people the freedom of choice and more control over their health care decisions. She also talked about how prices in Alaska were too high.

But eliminating the individual mandate will significantly increase health care prices.  It will also likely cause insurers to flee the markets, which means there will be much less choice for her constituents.  So they will end up with higher prices and even less control over their health care decisions, other than being free to choose to have no insurance at all.

And Susan Collins is even more disappointing, because as a former state insurance commissioner, she understands better than most the intricacies of how the provisions of Obamacare interact with each other, and how devastating the impact of the mandate repeal will be.  In fact, just a couple weeks ago, Collins herself warned that eliminating the individual mandate “will cause premiums in the individual markets to go up as healthier, younger people drop out” and “that for some middle-income people, it will cancel out their tax cut. The increased premium would be more than the tax reduction they would get from this bill.”

But now, after a “promise” from President Trump on Tuesday that he will support two separate Obamacare stabilization bills (the Alexander-Murray bill and the Collins-Nelson bill) in exchange for her vote on the tax bill, Collins appears to be ready to vote for the mandate repeal.  Collins is a very smart woman, but in this instance, she is either being a fool or a fraud, because we all know that you can rarely count on Trump to hold up his end of a bargain.  And the two bills Collins wants wouldn’t be voted on until after the tax bill passes the Senate (i.e., after she has given them her vote, giving Trump the opportunity to renege on his promise).

Additionally, even if Trump were to keep his word, there’s no guarantee that Republicans in Congress will support those bills and allow them to pass.  And even putting those concerns aside, the two bills Collins wants passed in exchange for her vote on the tax bill wouldn’t actually make up for the effects of repealing the individual mandate.

The CBO released a report on Wednesday indicating that the Alexander-Murray bill wouldn’t mitigate the effects of a mandate repeal at all.  The Collins-Nelson bill would likely have a small effect, but wouldn’t do nearly enough to fully counteract the damage. If you’re interested in the details, here’s a very bare bones explainer, and you can find a more detailed but very approachable explainer here.

The bottom line is that it appears as though Collins & Murkowski, like the rest of their GOP colleagues (possibly excepting John McCain who’s given us no clues about his vote so far), want to find a way to get to “yes” on the tax bill.  They all know they need to pass something, as the year is coming to a close and so far, they have no major legislation to show for it.

Even worse, the failure of Obamacare repeal was hugely depressing to their base and led big big donors to threaten to close their wallets.  Republicans have not hidden the fact that failure to pass a tax bill would be the last straw for their donors.  The GOP believes that the tax bill is their last, best chance to salvage not just 2017, but the fate of their careers and of their Party.  They’re not going to let a little thing like health care for 13 million people stop them.


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