by Countable | 11.7.17

What’s the story?

House Ways and Means Committee Chairman Kevin Brady (R-TX) said in an interview with Hugh Hewitt on Tuesday that he’s considering adding a repeal of Obamacare’s individual mandate to the GOP tax reform package that will be moving through his committee this week.

Repealing the individual mandate would save the federal government $338 billion over the next decade through reduced health insurance subsidies. This makes it an attractive "pay-for" to include in the tax reform package, as it would offset the impact of proposed tax cuts on the federal deficit absent other spending cuts.

Why does it matter?

Obamacare’s individual mandate requires people to buy health insurance at the expense of a tax penalty (formally known as the "individual shared responsibility payment"). It was created to encourage participation in health insurance marketplaces by people who otherwise would choose not to not buy health insurance.

What the individual mandate’s penalty amounts to can vary because a person pays either a flat rate of $695 per adult and $347.50 per child or 2.5 percent of their household income, whichever is greater. Some exemptions to it exist for hardships related to life events or financial status and membership in some groups.

Critics of the individual mandate argue that the federal government imposing a mandate on individuals to buy a product or pay a penalty violates their personal liberty. That led the late Supreme Court Justice Antonin Scalia to wonder during oral arguments in an Obamacare case if the government could impose a broccoli mandate on food consumers.

Others have noted that the penalty is primarily paid by low-income households. Using IRS data from 2015, the Washington Free Beacon reported that of the 6.7 million households that paid the individual mandate penalty, 79 percent earned less than $50,000 per year, and only eight percent earned more than $75,000 a year. In analyzing recent GOP healthcare proposals, the Congressional Budget Office estimated that 14 million fewer people would go without health insurance if the individual mandate were repealed.

Proponents of the individual mandate argue that without it, health insurance markets would collapse because more young and healthy people who consume less healthcare would forego purchasing coverage altogether. That causes insurers to hike premiums for those who remain in the market — older people who visit the doctor more — so that they’re not paying out more in benefits than they receive in premiums. (The economic term for this phenomenon is "adverse selection.")

What do you think?

Should Obamacare’s individual mandate to buy health insurance or pay a tax penalty be repealed? Does the mandate infringe on personal choices? Is it necessary to ensure more people buy health insurance? Hit Take Action, tell your reps whether you’d like to see the individual mandate repealed and share your thoughts in the comments below!

Take Action

— Eric Revell

RELATED READING

• Kevin Brady: Repeal of Obamacare’s individual mandate still possible in tax reform bill ― Washington Examiner

• Should the Obamacare Individual and Employer Mandates be Repealed? ― Countable

• Revamped GOP Healthcare Bill Gets Analyzed by Budget Office ― Countable

(Photo Credit: Sherry Smith / iStock)