What repealing Obamacare's individual mandate means

GOP seeks to repeal it as part of tax reform bill

By TAMI LUHBY
Headline Goes Here CNNMoney via CNN

NEW YORK (CNNMoney) - Republican lawmakers have long wanted to kill Obamacare's individual mandate, one of the least popular provisions of the health reform law. Now, GOP senators are trying to do the deed by repealing the mandate in their tax reform bill.

Senators say eliminating the individual mandate would give them an additional $338 billion over 10 years for their proposed tax cuts. Doing so would also fulfill their vow to dismantle Obamacare, at least in part.

Axing the mandate, which requires nearly all Americans to have health insurance or pay a penalty, would likely wreak havoc on the Obamacare market.

Some 4 million fewer people would be covered in the first year the repeal would take effect, the Congressional Budget Office said last week. That number would rise to 13 million by 2027, as compared to current law. Meanwhile, premiums would rise by about 10% in most years of the decade.

But most importantly, repealing the mandate would remove the stick that Obamacare wields to prod younger and healthier Americans to sign up for coverage. While experts have mixed views on how effective the mandate has been, many feel that removing it would cause the Obamacare market to tilt even more towards sicker and older consumers.

That, in turn, could make insurers think twice about participating in the exchanges, especially since they would still be required to cover those with pre-existing conditions and not charge them more based on their medical history.

A coalition of physician, hospital and health insurance industry associations called on Congress Tuesday to keep the individual mandate. The group, including the American Medical Association, the American Hospital Association, America's Health Insurance Plans and the BlueCross BlueShield Association, warned the Republican and Democratic leaders of the House and Senate that there would be "serious consequences" if Congress simply repeals the mandate while leaving Obamacare's other regulations in place.

"Repealing the individual mandate without a workable alternative will reduce enrollment, further destabilizing an already fragile individual and small group health insurance market on which more than 10 million Americans rely," the coalition wrote. "Eliminating the individual mandate by itself likely will result in a significant increase in premiums, which would in turn substantially increase the number of uninsured Americans."

The penalty for not having health coverage in 2017 is $695 per adult and $347.50 per child, or 2.5% of one's household income, whichever is greater.

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