What effect – the repeal of the individual mandate?

The new Tax Bill repeals the individual mandate – in 2019.  Not this year, mind you, you are still required to have insurance this year.   So what affect will this have on ObamaCare going forward?

If you listen to the politicians, Bill Pascrell (D.NJ) said “They obviously couldn’t kill it so they’re trying to starve it to death slowly.”  Lindsey Graham (R.SC) said “…we ripped the heart out of ObamaCare…”  I think both are a bit off base, and here is why-  Despite all kind of claims to the contrary, in my experience with clients, the mandate was not a big modifier of behavior.  Do I have some clients that pay premiums to avoid the penalty?  A few, yes – but not many.  Far more simply said ” I can pay $400- or more- a month for insurance, or pay a penalty a year from now that is far less.  If you make $50,000 a year your penalty is $1000;  insurance for that time period could cost you $6000 or more.

Another great number is the Congressional Budget Office claim that the loss of the mandate will cause 13 million fewer people to be covered over the next ten years.  Considering there are fewer than 10 million under ObamaCare, This trend analysis always seems a bit faulty.  Especially in light of the CBO’s estimates in 2012 that 25 million would currently be covered.

Some of the recent modifications may, in the end, have a much greater affect on policyholders.  here are some of the less-understood changes:

  1.  Cost-sharing subsidies-  Trump “de-funded” these.  When someone who earns less than 250% of the Federal Poverty Level (about $30,150) takes a Silver plan, their deductibles and other expenses are lower than someone who earns more than that amount.  This makes the insurance more affordable on a day-to-day basis.  for 2018, because the insurance companies followed the law and got their policies approved in this manner, they have to honor the lower amounts- but the government isn’t reimbursing the insurance company for those amounts now.  Many carriers saw this coming, and raised their rates accordingly for this year – one reason why rates are so much higher again this year.
  2. Shortened Enrollment and less marketing- The Trump administration cut the enrollment period and sharply dropped the marketing budget for this year.  While enrollment is done, I still have this week several people who just figured out that they missed it for this year!
  3. “Skinny” Health Plans – This may turn out to be the most destabilizing force.  In October, an executive order allows both association plans and Short-term major medical plans to not meet the ObamaCare rules.  Under the Obama Administration, Short Term plans had been limited to 90 days.   Plans like MediShare and US Health Advisors are already gaining traction as people stare in horror at their renewal premium, and these new plans may attract a lot of the younger and healthier folks – adversely putting the sicker into “regular” plans, and driving costs up even further.


One thing is for sure – with the changes the Republicans have made, after two years of “repeal and replace” noise – the Republicans now own as much of ObamaCare as the original Architects.  I fully expect that to be used against them in the coming midterm election season.