Free the Obamacare 15 Million

The Congressional Budget Office (CBO) today warned lawmakers that 15 million people will lose medical coverage next year if the Senate GOP’s health-care bill becomes law.

That’s not quite accurate. CBO doesn’t believe that millions will “lose” their insurance in 2018. Instead, the agency thinks that millions will happily cancel their coverage — even those who get it for free. The reason: The Senate bill would repeal the Obamacare tax penalty on the uninsured, known as the individual mandate.

Supporters of Obamacare proclaim that the law has reduced the number of people who lack coverage. They’re right. Government surveys show that the number of non-elderly uninsured people fell from 44.3 million in December 2013 (the month before Obamacare took full effect) to 28.2 million at the end of last year. That’s 16 million fewer uninsured people over a period of only three years, a genuine public-policy achievement.

But here’s the catch: If CBO is to be believed, 15 million people didn’t want health coverage in the first place. They enrolled only to keep the IRS off their backs.

In its analysis of the Senate bill, CBO predicts that repealing the tax on the uninsured would next year induce 7 million people to cancel their individual insurance policies, 4 million to drop their job-based coverage, and 4 million others to abandon Medicaid, even though the government provides it free of charge in most cases.

If CBO is right, these 15 million Americans would take immediate advantage of a provision freeing them from the obligation to obtain a product they neither want nor feel they need.

Those 15 million would join a legion of refuseniks who either paid or circumvented Obamacare’s tax on the uninsured. Last January, the IRS commissioner reported to Congress on the number of uninsured people who had paid the tax, obtained a waiver, or refused to tell the government whether they had insurance in 2015. He reported that:

6.2 million uninsured people paid the tax on the uninsured;
12.7 uninsured million people — more than twice as many — obtained exemptions from the penalty;
4.3 million people “didn’t check the box” — they simply refused to tell the IRS whether they had insurance. The government processed their tax forms and sent them their refunds without enforcing the coverage requirement.

That totals 23.2 million Americans who paid, avoided, or ignored the individual mandate. Repealing that mandate would emancipate them from IRS oversight and liberate an additional 15 million people (if you believe CBO) from coverage they’d rather not have.

It’s rare that Congress writes a bill that would please more than 38 million people without inflicting hardship on others (although health-policy theorists infatuated with the individual mandate will grieve its passing). Congress should not squander that opportunity.

The mandate, like the full repeal of Obamacare, is not politically viable. Both the House and Senate bills largely retain the Obamacare subsidies, insurance regulations, exchanges, and Medicaid expansion. The subsidies in those bills are less generous and more convoluted than those in Obamacare, but otherwise are indistinguishable from them.

The Senate, meanwhile, is rapidly unwinding the Medicaid reforms the House passed just last month. Former House Budget Committee chairman and now Ohio governor John Kasich has teamed with former OMB director and now Ohio senator Rob Portman to tear away at those reforms. In their former lives as budget mavens, Kasich and Portman preached the gospel of federal spending restraint; now they are apostles of fiscal incontinence. In 2015, Ohio spent nearly twice as much on Medicaid as it did on schools. No state came close to that preference for welfare over education. Hooked on federal Medicaid money, Kasich and Portman crave more and seem determined to take down the Senate bill if they don’t get it.

Whether or not the Senate bill passes, Obamacare will survive. Propping it up will, of course, require money, and not just for Medicaid. The Senate bill allocates an estimated $20 billion over the next two years for “cost-sharing reduction subsidy” payments to insurance companies and an additional $86 billion over the next four years “to address coverage and access disruption.” Translation: payoffs to insurers to keep them from withdrawing from states’ individual markets.

The exchanges have proven to be a losing proposition for many insurers. Republicans and Democrats alike fear that no companies will sell policies next year in many areas, leaving people who actually want health insurance with no options. It is in no one’s political interest to let that happen. So Congress will spend more money to prop up Obamacare, whether in this bill or, should it fail, in one congressional Democrats will help craft.

That additional money for the insurance industry may avert the near-term crisis, but Congress will have to shovel cash into the Obamacare money pit for many years to come.

That is a problem for another day. This week, the Senate will decide whether to end government harassment of Americans who decline health-insurance coverage.

The Senate should pass the bill and free the Obamacare 15 million.