ACA pro­vi­sion at risk: GOP move is a bid to pay for a tax cut.

ACA in­sur­ance man­date is a tempt­ing tar­get in bid to off­set rev­enue losses

The Washington Post - - FRONT PAGE - BY CAROLYN Y. JOHN­SON

Se­nate Repub­li­cans slipped the re­peal of a key part of the Af­ford­able Care Act into their tax bill Tues­day, adding a pro­vi­sion that would al­low them to de­clare a vic­tory on health care while gain­ing more than $300 bil­lion to off­set the cost of tax re­form.

The in­di­vid­ual man­date is one of the most un­pop­u­lar parts of the ACA — a re­quire­ment that peo­ple ei­ther buy health in­sur­ance or pay a penalty.

About 6.5 mil­lion tax­pay­ers paid a fine in 2016, ac­cord­ing to a Jan­uary let­ter sent by IRS Com­mis­sioner John Kosk­i­nen.

Re­peal­ing the man­date would be a way for Repub­li­cans to claim they are keep­ing their prom­ise on un­rav­el­ing Pres­i­dent Barack Obama’s sig­na­ture health-care law — and give politi­cians more wrig­gle room on their tax plan.

The tax plan can add only $1.5 tril­lion to the deficit over the next decade, and Repub­li­cans are al­ready bump­ing up against that limit. So if they want to make more changes, they’ll prob­a­bly need more money.

Re­peal­ing the man­date would free up about $338 bil­lion over a decade, ac­cord­ing to an anal­y­sis by the non­par­ti­san Con­gres­sional Bud­get Of­fice.

At first glance, get­ting rid of the penalty might ap­pear to make tax re­form harder, since the gov­ern­ment would lose a source of in­come — penalty pay­ments by unin­sured peo­ple that were pro­jected to add up to $43 bil­lion over a decade, ac­cord­ing to the CBO.

A re­peal would bring big sav­ings be­cause gov­ern­ment spend­ing on sub­si­dies to help peo­ple af­ford cov­er­age would plum­met: 13 mil­lion fewer peo­ple would have health in­sur­ance in 2027.

Some healthy peo­ple who are buy­ing health in­sur­ance today be­cause of the penalty would stop buy­ing it.

That would have rip­ple ef­fects: As fewer of those healthy peo­ple signed up for in­sur­ance, pre­mi­ums would in­crease to pay for the health-care costs of a sicker group of peo­ple.

Those ris­ing pre­mi­ums, in turn, would price more healthy peo­ple out of the mar­ket, cre­at­ing a vi­cious cy­cle.

The net ef­fect would be that the gov­ern­ment would spend far less on sub­si­dies. Adding the re­peal of the in­di­vid­ual man­date into the tax bill puts Repub­li­cans in an odd po­si­tion.

Some Repub­li­cans have ar­gued the in­di­vid­ual man­date isn’t ac­tu­ally ef­fec­tive at per­suad­ing peo­ple to buy in­sur­ance.

Con­ser­va­tive Avik Roy wrote that “the CBO’s ex­ag­ger­ated cov­er­age es­ti­mates flow from its faith in the in­di­vid­ual man­date’s mag­i­cal pow­ers,” ar­gu­ing it has a “min­i­mal” ef­fect on Amer­i­cans’ de­ci­sions to buy health in­sur­ance.

At the same time, Repub­li­cans are de­pend­ing on those es­ti­mates of mas­sive sav­ings in gov­ern­ment spend­ing on health care to pay for tax re­form.

“I think it’s sort of ironic that the only way you get lots of sav­ings for tax re­form is that the man­date is very ef­fec­tive at get­ting peo­ple into the mar­ket,” said Craig Garth­waite, as­so­ciate pro­fes­sor of strat­egy at North­west­ern’s Kel­logg School of Man­age­ment. “They are strug­gling for pay-fors, and this is a big one. But the pay-for they’re fight­ing for isn’t one they be­lieve works.”

The ma­jor po­lit­i­cal risk is that lump­ing the re­peal of the man­date in with tax re­form could en­dan­ger the pas­sage of the bill, ril­ing up a new set of crit­ics.

The move to in­clude the pro­vi­sion in the tax bill was im­me­di­ately op­posed by ma­jor health in­dus­try groups, in­clud­ing the main lob­bies for health in­sur­ers, hos­pi­tals and physi­cians.

The in­flu­en­tial groups warned in a let­ter to politi­cians that the move would drive pre­mi­ums up and leave more Amer­i­cans unin­sured. “It seems strange to cre­ate an even greater set of ene­mies for your­self,” Garth­waite said.

“They are strug­gling for pay-fors.” Craig Garth­waite, North­west­ern’s Kel­logg School of Man­age­ment

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