Tax bill strikes major blow to ObamaCare: Will it survive?

In this March 23, 2010, file photo President Barack Obama is applauded after signing the Affordable Care Act into law in the East Room of the White House in Washington. (AP)

Congressional Republicans, after trying unsuccessfully for months, delivered a major blow to the Affordable Care Act this week by including in their sweeping tax reform bill a provision that repeals the individual mandate.

While that provision was overshadowed by the intense focus on what the passage of the biggest tax overhaul in three decades means for Americans’ paychecks, the impact on ObamaCare could be just as significant.

Already, the White House is casting this as the demise of former President Barack Obama's signature domestic policy achievement.

“When the individual mandate is repealed, ObamaCare is repealed. That’s where they get their money,” President Trump said Wednesday during a Cabinet meeting. “With this bill, we have essentially repealed ObamaCare. And we’ll come up with something much better. ObamaCare has been repealed in this bill.”

The law hasn't literally been repealed. But the individual mandate is a linchpin of the ACA, which is why its defenders fought so hard to preserve it -- first before the Supreme Court, and later in Congress.

Under the ACA, the individual mandate required most people to have health insurance meeting specific standards. The law imposed tax penalties for violations.

The idea behind the mandate was to make sure young and healthy customers are buying into the system, to offset the cost of taking on more sick and elderly customers.

Without the mandate, the future of ObamaCare as a whole is unclear.

Sen. Orrin Hatch, R-Utah, touted the move as “the beginning of the end of the ObamaCare era” in an op-ed for Fox News.

“Repealing the individual mandate tax restores liberty to the nation’s health-care system. Once again, the American people will be back in charge of their health care – not Washington bureaucrats,” Hatch wrote.

Sen. Orrin Hatch, R-Utah, says the repeal is the 'beginning of the end of ObamaCare.' (AP)

On the surface, the repeal was billed in part as a way to save money for the federal government by reducing subsidies.

According to projections from the Congressional Budget Office and the Joint Committee on Taxation, the federal budget deficit will be reduced by $338 billion between 2018 and 2027 in this way.

But millions could also drop out of the insurance pool since they no longer face a penalty for noncompliance.

Official estimates predict 4 million more people would be uninsured the year the mandate repeal takes effect, and 13 million more Americans would be uninsured by about 2027. These effects, according to the CBO and JCT, would occur because healthier people would be less likely to purchase insurance.

This could mean more premium pain for those still in the system. Average premiums are estimated to increase by 10 percent.

“They’re going to pay a price for that in premiums,” House Democratic Leader Nancy Pelosi, D-Calif., said Wednesday.

House Democratic Leader Nancy Pelosi, D-Calif., on Capitol Hill following the passage of GOP tax reform. (AP)

Premiums, though, were already rising before the mandate provision passed.

Enrollment nevertheless was strong this year, with the government reporting Thursday that nearly 9 million people had signed up in the most recent period.

The big question now will be whether the insurance markets can adjust, or whether the fallout is so significant that it spurs Congress to hammer out a more comprehensive health care overhaul.

While congressional Republicans failed to ‘repeal and replace’ ObamaCare in its entirety this year, Republicans hope the mandate repeal will force an eventual legislative fix to the entire program.

Sen. John Cornyn, R-Texas, bluntly said earlier this week the repeal would make the program "unworkable," in turn prompting new bipartisan negotiations on Capitol Hill.

Senate Minority Leader Chuck Schumer, D-N.Y., suggested that current bipartisan health care stabilization bills “won’t have the same impact” -- opening the door to some manner of new legislation, while lamenting the GOP provision.

“We’ll need new legislation to account for the Republicans’ latest attempt to undermine our health care system,” Schumer said.

In November, health insurance industry experts and giants – America’s Health Insurance Plans, American Academy of Family Physicians, American Hospital Association, BlueCross BlueShield, American Medical Association, and the Federation of American Hospitals – penned a letter to congressional leaders urging them to maintain the individual mandate until Congress could enact a full reform to “adequately assure a balanced risk pool and prevent extraordinary premium increases.”

The letter warned of “serious consequences” if Congress “simply repeals the mandate while leaving the insurance reforms in place.”

But despite predictions of premium hikes, Republicans cast the mandate repeal as a net positive.

“Under ObamaCare, if Americans didn’t buy the kind of health insurance that Washington thought they should buy, they were punished with a tax penalty,” Senate Majority Leader Mitch McConnell, R-Ky., wrote in an op-ed for Fox News late Wednesday. “But if the plans available under ObamaCare are not affordable or not desirable, the blame lies with the failing law itself.”