Buried in all the major changes brought by the GOP’s Tax Reform bill was a long sought after GOP goal; repeal of the ACA’s Individual Mandate starting in 2019.  The Mandate was perhaps the most unpopular part of the law and it showed that moderates such as John McCain, Lisa Murkowski, and Susan Collins voted for a bill to repeal it but did not touch any other aspect of the law.

They have ample reason to do so for both political and budgetary reasons.  Budget-wise, repealing the Individual Mandate would save the government a few hundred billion over 10 years.  The larger and more political reason is the Individual Mandate is extremely unpopular.  A Kaiser Family survey in November found 55 percent of all Americans supported repealing the IM in tax reform.  Among Independents, 58 percent, supported the idea.  So it is a safe course to take, pleasing Independents and also not touching the other sensitive aspects of the law.

After the law was passed the President tweeted Republicans “have essentially repealed Obamacare.”  Trump may be right tax reform will benefit the majority of Americans and corporations, but on this he is wrong.  Repealing the IM will wound the law but it will not by itself unravel the law.

Who Feels The Impact?

Repealing the IM will make the marketplaces function worse and cause premiums to rise but few consumers will feel it.  At least in the short term.  The generous tax subsidies offered to some middle class families is still in effect, the law’s ban on discriminating against those with preexisting conditions and finally Medicaid Expansion is still on the books.

Obamacare was a 2,300 page law that had multiple moving components.  The portion of the law that covered the most individuals was Medicaid Expansion, regardless of whether states expanded Medicaid or not.  Because the law ensured continuous funding for states for Medicaid Expansion repeal of the Mandate will not impact these individuals.

Repeal’s Time Has Come And Gone

It was hard enough for Republicans to cobble together consensus with 52 Senators.  After the debacle in Alabama, they will only have 51 and their primary goals for 2018 appear to be an infrastructure package, pushing through judicial nominees for the nation’s highest courts and finding bipartisan consensus on a budget bill for 2018 that eliminates the sequester, funds the military appropriately and ensures DACA children can stay in the country legally.

Both Murkowski and Collins have indicated they do not feel revisiting repeal is the right way to go.  Dough Jones might be the only Democrat coming from a Deep South state but he has shown no interest in catering to his state’s conservative roots on the issue.

The irony of passing tax reform is while Republicans might have angered progressives by cutting taxes for corporations and Americans they also might have given them a gift.  By repealing the IM the most unpopular aspect of the law is set to go away making repeal of other aspects of the law more difficult.

It is easy to see why the IM is so unpopular.  Ted Cruz (R-TX) put it bluntly when he said, “Each year, the IRS fines about 6 million people because they don’t have enough money to afford health care.”  But other aspects of the law are far more popular.  For example, Medicaid Expansion and covering individuals with preexisting conditions are popular, even among Republicans.

What The Experts Think

Repealing the IM is wise from a budgetary perspective and is a politically safe move but most experts don’t think it will destroy the law or destabilize the markets.  Rather, from a policy perspective, experts have a general consensus that….

1. Unlike in other countries with an Individual Mandate the US’s Mandate is too weak to compel people to buy insurance.  While it might have made sense for Democrats back when the law was being passed it still makes it cheaper for many Americans to pay the penalty instead of spending thousands on insurance premiums they likely won’t use.
2. Many Americans who do not receive subsidies, in other words those who remain in the individual, private market, are being priced out of the market.  The Americans who remain in the market receive subsidies and as a result they remain relatively protected from immediate changes to the law.

Without the mandate the markets are likely to shrink to two primary groups, people who receive generous subsidies and those with preexisting conditions.  From a market perspective this is a disaster to function well on a cost basis.  But government subsidies and federal statutes ensure millions will remain covered.

What The ACA Will Become

While having the IM might have delayed the ACA’s route towards its true destination its repeal will only accelerate the process for the ACA to turn into a subsidized and expensive public insurance program.  The law is essentially turning into another expensive entitlement to cover low-income individuals.

Meanwhile, the rest of the law will likely remain in place.  Medicaid Expansion covering up to 133 percent of the poverty level, has covered the vast majority of those with insurance.  The most vulnerable among the population get subsidized healthcare and insurance companies cannot deny them coverage.  While Republicans may talk a good game about removing the contraception mandate in reality they really only want to tinker with it around the edges (give companies and non-profits the option to include it or not).

This might lead to some GOP led states that have not expanded Medicaid to revisit the decision.  After-all, states tend not to worry about federal problems other than to say they are incompetent and we are not.  Why worry about the federal government having to pay for an entitlement that benefits your voters?  It really will close a lot of holes in the social safety net for the poor.  Meanwhile, the majority of the infrastructure of the law will remain in effect.

Even If Republicans Cannot Repeal Obamacare They Can Make It Worse

Repeal may be off the table but the GOP and Trump can make tiny cuts over and over.  Repealing the IM might be the biggest and most immediate blow the law but the administration has shown it knows how to make tiny cuts.

Take the Trump administration’s reduction of the law’s advertising budget by almost 100 percent.  Enrollment through the HealthCare.gov will fall by one or two million from last year.

The administration is also promoting alternative and non-compliant ACA plans to consumers which siphon healthier people away from the law.  Again, Republicans have tried to make the contraception mandate more flexible.

The biggest unknown of the law is whether insurers will desert the marketplaces en masse.  Right now, every country is covered by an insurance carrier but that only occurred after cajoling by the federal government.  Having a subsidized customer base is what every business loves to have.  But, there is no guarantee that customer base will be there in perpetuity nor that insurers will not lose money on the exchanges in future years.

How badly the insurance markets deteriorate with repeal of IM and other administrative actions surely has to be concerning insurers.  The best case for progressives might be that Trump’s and the GOP’s actions cause Congress to intervene and save the law.

More costs to support such an entitlement will inevitably lead into budget battles over entitlement spending.  Not over Social Security or Medicare but Medicaid, CHIP and other low-income household supporting programs.

The best news for Democrats is Republicans are worried about their majorities in Congress and make compromise on fixing the law in the short-term to save their majorities.  They might even get Trump on board.

But, after this year the basic course of the future is clear.  The most popular and gut busting elements of the law, Medicaid Expansion, preexisting conditions protections and the contraception mandate are safe for now.

Republicans started the year with high hopes of repealing the law.  They’ll have to settle with repealing the IM.  It might save the GOP some heartache in the short-term but long-term both parties are going to have to grapple with some tough choices on what to do to keep the law financially solvent well into the future.