Is the ObamaCare Individual Mandate Self-Repealing?


The individual mandate in the Affordable Care Act (ACA or ObamaCare) mandate “represented a grand bargain between the government and the insurance industry,” writes Doug Badger. “Insurers agreed not to base premiums on applicants’ medical conditions, and in exchange, the government agreed to subsidize premiums and penalize the uninsured. In theory, the threat of tax penalties would induce healthy people to pay an unfairly high price for a product they wouldn’t otherwise buy, creating a stable insurance pool that would generate billions in profits for insurers.”

But premiums have soared so high that more and more people are exempt. The IRS cannot impose penalties if premiums would exceed 8.8% of an uninsured person’s income. Restoring the cost-sharing subsidies would likely have minimal effect because premiums of Bronze plans are largely unaffected by those subsidies.

Unsubsidized customers, facing double-digit premiums increases again this year, are seeking alternatives, such as a religious health-sharing ministry, short-term health insurance, or an indemnity plan. Enrollment in sharing ministries has more than doubled from about 350,000 in Nov. 2014 to above 860,000 today, according to the Alliance of Health Sharing Ministries. A significant growth in short-term plans is expected. An executive order by President Trump seeks to reverse an Obama Administration rule that limited the plans to 90 days, allowing them to last as many as 364 days as soon as the start of 2018.

It is appropriate to have repeal in the tax-reform bill because is “a big tax cut aimed squarely at America’s middle class,” writes Ryan Ellis. Moreover, “the mandate is a tax which punishes those who can least afford it least…. According to the IRS, some 6.7 million American families pay Obamacare’s individual mandate surtax, forking over $3 billion annually to Uncle Sam merely for exercising their right not to purchase an unaffordable Obamacare plan.”

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