What Happens To Obamacare If Individual Mandate Disappears?

Republicans' tax overhaul gets rid of the tax penalty for people who fail to maintain insurance coverage. If it becomes law, what happens to the deficit and the number of uninsured?

RAY SUAREZ, HOST:

As the House and Senate vote to overhaul the tax code, they're also voting to undo a key part of the Affordable Care Act, or Obamacare. The bill gets rid of the tax penalty for failing to maintain insurance coverage. It's known as the individual mandate, and it's probably been the most vilified part of the healthcare law. Joining us now is NPR health policy correspondent Alison Kodjak to talk about what happens to Obamacare without the individual mandate. Hi, Alison.

ALISON KODJAK, BYLINE: Hi, Ray.

SUAREZ: So is the assumption that lots of people will simply decide not to buy insurance if there will no longer be a penalty?

KODJAK: Well, some people will. The Congressional Budget Office did an estimate on this, and they say that in the first year that this goes into effect, which is 2019, about 4 million fewer people will have insurance than would if the mandate stayed in place. And by 2027, about 13 million fewer would. Some of those people are doing it by choice, some perhaps because they can't afford insurance because the Congressional Budget Office also says that premiums will be about 10 percent higher. That also will cut the federal spending by $338 billion because the government will have to spend less on subsidies to help people buy insurance.

But if we talk about the purpose of the mandate, it's to get people who don't think they need to buy insurance to buy it for their protection but also to strengthen the market because the more people who buy in - whether they are ill or not, that lowers premiums for everybody.

SUAREZ: Let's talk a little bit more about the assumptions being made here. The people who decide not to buy insurance because the mandate disappears are people who wouldn't have wanted to buy insurance in the first place.

KODJAK: Well, yeah, there are definitely those people who just don't think they need it. They think they're healthy. They're young. It's not worth the money. But there are also people who want insurance but can't afford the price or don't believe they can afford the price. I talked to some people during my reporting of this who have really high premiums - over a thousand dollars a month for - you know, there was a young woman with two children who I talked to. And so she's spending $13,000 a year already and not even necessarily needing a lot of healthcare. And then there are also the people who have just been priced out. It's just too expensive, especially if they don't qualify for subsidies. And especially if premiums go up, there might be more of them.

SUAREZ: So the pool of the insured will shrink. Premiums will go up. And I guess the people who are in the insurance market will likely be a little older, a little sicker. Is that the death spiral we've heard about for years since the inception of the Affordable Care Act?

KODJAK: Well, that's a little bit hard to say. The expert opinions are really all over the place on this. The Congressional Budget Office says they think the markets will remain stable in most of the country, and that's in part because there are still these very generous subsidies for people to buy insurance that will keep a lot of people in the market. If you have income that's low enough to qualify for a subsidy, insurance actually is quite affordable, and you may decide you really want to have it.

Other analysts I've talked to aren't so sure. They say a lot of young people may drop their Obamacare insurance and buy a policy outside of the ACA markets. President Trump earlier this year issued an executive order encouraging insurance companies to come up with these plans. They can be cheaper, but that's often because they don't cover all the things that an ACA-compliant plan has to cover.

SUAREZ: That's NPR's Alison Kodjak. Thanks a lot.

KODJAK: Thanks, Ray.

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