Obamacare’s ‘mandate’ is the center of attention right now

Ethan Wolff-Mann
·Senior Editor
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A partial repeal without replacement would cause “chaos,” Sen. Rand Paul has said. Source: Reuters
A partial repeal without replacement would cause “chaos,” Sen. Rand Paul has said. Source: Reuters

In the first White House press conference Q & A session with the Trump administration’s Press Secretary Sean Spicer, two reporters asked about plans regarding the ACA’s mandate, which requires individuals to have health insurance or pay a penalty.

Answering the New York Post’s question as to whether the administration would enforce the mandate or not, Spicer demurred, saying Trump will work with Speaker Paul Ryan on “both the repeal and replace aspects of this,” before moving on.

A short while later, another reporter requested to go back to what the Post had asked about “Obamacare and the mandate.“ In addition to the Obamacare individual mandate, confusingly, the reporter also referred to another “mandate” in her question—the metaphorical kind that an elected official might claim in a dominant victory.

After bringing up the Post’s mandate question, Spicer was then asked: “Do you believe that you have a mandate to be able to force through what you had talked about, replacing portions of Obamacare, that really subsidized a whole piece of it to help low-income people get health care?”

In response, Spicer only spoke about that electoral “mandate,” saying: “I think that all leaders have a mandate for the American people, to fix this system and make it better.”

The two answers made it seem like Spicer himself was confused about which mandate was being discussed. “Sean Spicer sounded like he has no idea what the Obamacare mandate is. Just filibustered,” tweeted Matt O’Brien of the Washington Post’s Wonkblog.

As a senior White House official, Spicer almost certainly knows what the Obamacare mandate is. The demurrals could be indicative of how explosive the issue of mandate really has been.

Repealing and replacing Obamacare is among the administration’s top priorities, though there’s been little information given as to what parts, if any, of the ACA might be retained, and what will actually replace it, though various ideas have been proposed by Congress and the 2016 Trump campaign. Typically they involve Health Savings Accounts, legalizing the sale of insurance across state lines—which is currently hampered by financial and logistical barriers to entry, not regulatory—and getting rid of this “mandate.”

The ACA mandate requires individuals to have health care (if they can afford it), or else pay a penalty when they file their taxes.

How it works is simple: Since you can get health insurance even if you’re sick (preexisting condition), healthy people would have no reason to sign up for health insurance without such a mandate. With premiums only coming from sick people, there would not be enough cash in the pool to pay for their healthcare. Insurance only works with diverse pools of people.

The administration’s plans so far

On Sunday, top Trump aide Kellyanne Conway told George Stephanopoulos that the president wants to get rid of the penalty. More specifically, she indicated that might mean not enforcing the mandate. (Killing it entirely would require legislation by Congress.) A recent executive order gives leeway to the government agencies, like the Health and Human Services department, to “waive, defer, grant exemptions from” the ACA costs, taxes, fees, and penalties—the mandate for example.

This is what the White House Press Pool was trying to get at in the questions to Spicer.

What happens if the mandate isn’t enforced?

“Hard to say for sure,” says Karen Pollitz of the Kaiser Family Foundation. “Closest thing may be the CBO’s estimate on what would happen to coverage and premiums if the individual mandate were to be outright repealed, leaving in place other ACA market rules [letting in people with pre-existing conditions, for example] CBO predicts, essentially a death spiral, with rising premiums and coverage losses.”

This “death spiral” is perhaps why Conway and Spicer have been delicately stepping around the mandate when asked about its future. More specifically, the nonpartisan Congressional Budget Office’s report found that premiums for people buying insurance directly from insurers through marketplaces would see premiums go up 20% to 25% in the first new plan year without the mandate, as insurers scramble with covering a pool with fewer healthy people.

If the mandate got cut in a bill that resembles last year’s Restoring Americans’ Healthcare Freedom Reconciliation Act of 2015—which included cuts to the Medicaid expansion and marketplace subsidies before it was passed and vetoed, the premium amounts would rise 50% in the second year and “about double” within a decade.

This unpleasant situation is precisely why Republicans like Sen. Rand Paul have expressed serious concern about repealing and delaying instead of enacting a simultaneous replacement—a delay that could cause $350 billion, according to the bipartisan Committee for a Responsible Federal Budget.

“I think it’s imperative that Republicans do a replacement simultaneous to repeal,” the Kentucky Senator told “Morning Joe” in early January. Paul has argued that getting rid of Obamacare piecemeal would cause chaos. “We should repeal Obamacare, but partial repeal will only accelerate the current chaos and may eventually lead to calls for a taxpayer bailout of insurance companies,” he wrote in a January op-ed.

Previously, Trump has said he would not repeal and delay, Paul tweeted. But Conway’s comments and Trump’s executive action suggest it is still possible the ship could sink before any lifeboats arrive as a viable replacement option.

Ethan Wolff-Mann is a writer at Yahoo Finance focusing on consumer issues, tech, and personal finance. Follow him on Twitter @ewolffmann.

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