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February 15, 2019

CBO: Repealing Individual Mandate Will Substantially Decrease Federal Deficit, Number of Insured

Laura Joszt
Some Republicans are interested in attaching a repeal of the individual mandate to a tax bill, and interest from members of Congress on the impact of such a move prompted the Congressional Budget Office to publish a revised estimate of what would happen.
Although Congress has not passed legislation to wholly repeal the Affordable Care Act (ACA), there has still been interest in repealing the law in a piecemeal way. One particular way of interest has been repealing the individual mandate through the GOP’s tax bill.

In response to interest from members of Congress, the Congressional Budget Office (CBO) and the staff of the Joint Committee on Taxation (JCT) released an updated estimate on the effects of repealing the ACA’s individual mandate, which requires people who are not eligible for exemption to either have health insurance or pay a penalty.

On Wednesday, the CBO released the newest report, which found that repealing the individual mandate would reduce the federal deficit by about $338 billion between 2018 and 2027, but during that same time period 13 million people would lose their health insurance. The report projects that healthier people would be less likely to obtain insurance, and the resulting premium increases—about 10% in most years from 2018 to 2027—would cause more people to not purchase insurance.

“In CBO and JCT’s estimation, with no penalty at all, only a small number of people who enroll in insurance because of the mandate under current law would continue to do so solely because of a willingness to comply with the law,” according to the report.

The last time the CBO estimated the effect of repealing the individual mandate, it had determined that doing so would reduce the federal deficit by more: $416 billion between 2018 and 2026. In addition, it projected that more people would lose insurance: 28 million people by 2026.

However, CBO and JCT note in the updated report that there is a lot of uncertainty surrounding the estimates they present, because of the difficulty of predicting how federal agencies, states, insurers, employers, individuals, doctors, hospitals, and other parties might respond.

“Despite the uncertainty, some effects of this policy are clear: For instance, the federal deficit would be many billions of dollars lower than under current law, and the number of uninsured people would be millions higher,” the report concluded.

 
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