Repealing the Affordable Care Act’s individual mandate could eventually leave 13 million more Americans uninsured and destabilize health insurance markets, critics warned, an outcome that could be especially bad for high-cost states like New Jersey.
A wide array of healthcare advocates, insurance leaders, and policy experts joined forces Wednesday to oppose the latest addition to the Republican tax-reform plan under consideration in the U.S. Senate. The new amendment would eliminate the mandate, which triggers a tax penalty for those that don’t have healthcare coverage — a controversial element of the law that experts insist is essential for broad, affordable coverage.
(A version of the tax plan in the U.S. House of Representatives does not include the mandate repeal.)
Bad to worse
The Senate proposal, which was approved by the Senate finance committee Wednesday, had already attracted the ire of the Garden State members, both Democrats. Sens. Robert Menendez and Cory Booker said the addition of the individual-mandate repeal only made a bad tax bill even worse.
Booker called it “an offense to basic fairness” and “bad economic policy” that will harm New Jerseyans and other hardworking Americans. “It’s like a wolf in wolf’s clothing,” Menendez tweeted Wednesday.
Ray Castro, the healthcare policy analyst for New Jersey Policy Perspective, a progressive think tank that has tracked the ACA and the tax bill, said the latest version of the Senate bill is a “lose, lose” for the Garden State. “When the harm caused by this proposal is added to the Senate tax proposal,” he said, “the combined impact is disastrous.”
Critics fear repealing the individual mandate would encourage younger, healthy people to avoid spending money on healthcare coverage. As these people drop out of the insurance pool, the concentration of sicker, more costly patients increases, driving up healthcare costs and the price of coverage for everyone.
“Under current law, the individual mandate is one of the primary incentives for individuals to enroll in coverage,” wrote leaders from a diverse coalition: America’s Health Insurance Plans, American Academy of Family Physicians, American Hospital Association, American Medical Association, Blue Cross Blue Shield Association, and Federation of American Hospitals.
“Broad and sustained enrollment contributes to affordable coverage as costs are shared across a larger pool of individuals,” the group wrote in a joint letter to Congressional leaders.
Maintain the mandate
“Eliminating the individual mandate by itself likely will result in a significant increase in premiums, which would in turn substantially increase the number of uninsured Americans,” they warned, urging Congress to maintain the mandate until it can enact comprehensive reforms to stabilize the system.
The tax-bill measure is just the latest Republican attack on the ACA, or Obamacare, to rally opposition from a broad coalition of healthcare industry and patient advocacy groups. However, critics of the 2010 law, which extended coverage to more than 800,000 New Jeseyans, claim it has driven up costs, reduced options for insurance consumers, and harmed businesses on many levels.
Earlier attempts to repeal and replace the act, which have been defeated in the House and Senate, also triggered a local legislative response. In July, a trio of state Democrats introduced a plan to create several new taxes — on investment income and payroll for some higher-earners — to replace several ACA-related federal levies that were threatened for repeal. (The bill has yet to see a hearing in either legislative house.)
The latest tax bills in both the Senate and the House reduce tax rates on corporate earnings and personal income and scale back the estate tax. To help pay for these changes, the measures also call for eliminating most of the deductions for state and local taxes — an important offset for residents in high-tax states like New Jersey and New York. The elimination of the ACA mandate-related federal penalties is also being proposed as a cost-saver.
How the changes would impact taxpayers depends on a number of factors, including income level, home ownership, family size and other factors. But according to Jon Whiten, vice-president of NJPP, the proposal could actually result in higher taxes for one out of four New Jersey residents.
The push by GOP leaders in the Senate to include the individual-mandate repeal doesn’t sweeten the pot for a state like New Jersey, NJPP’s Castro and others said. Healthy residents may decide to opt out of coverage they purchase on the individual market, which includes subsidized commercial policies sold under the ACA, and now covers nearly 370,000 people here.
Consumers are already facing double-digit increases for some policies next year, due largely to uncertainty about the ACA’s future. Eliminating the mandate could drive up premium costs by another 10 percent, according to the Center for Budget and Policy Priorities, which would add hundreds of dollars annually to healthcare costs for some 7 million middle-income Americans, and over $1,000 for some seniors.
Castro said the costs could be even higher in New Jersey, given the fact that we have dozens of coverage mandates — patient protections that make insurance more expensive here — and a history of pricy policies.
“Prior to the ACA, New Jersey had the highest premiums in the nation — this could happen again if the individual mandate is repealed,” Castro noted. “Rapidly rising premiums, in turn, would cause many people who are sick to abandon their insurance because they cannot afford it.”
Nationwide, these changes would add 4 million people to the uninsured rolls by 2019, when the law would take effect, and at least 13 million by the end of the decade, the nonpartisan Congressional Budget Office estimates. According to CBPP, the uninsured rate for non-elderly Americans would rise from 11 percent to 16 percent; in New Jersey, less than 8 percent of the population lacks insurance, the lowest level in recent history.