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What The Republican ‘Compromise’ Of Delaying Obamacare For A Year Would Do To The Economy

By Tara Culp-Ressler on September 29, 2013 at 11:43 am

"What The Republican ‘Compromise’ Of Delaying Obamacare For A Year Would Do To The Economy"

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obamacareCongress must pass a funding bill by Monday to keep the government operating after September 30. Despite the rapidly approaching deadline, House Republicans have doubled down on their strategy to use the continuing resolution as a vehicle to attack Obamacare. On Saturday night, the House passed a measure that funds the government through December 15 in exchange for delaying the health reform law for one year and repealing the law’s medical device tax.

On Sunday, Sen. Ted Cruz (R-TX), who has been one of the loudest proponents of this particular anti-Obamacare strategy, deemed the measure a good “compromise,” and put the onus on Senate Majority Leader Harry Reid (D-NV) to accept their radical proposal or have to shut the government down. “There have been multiple compromises from the Republicans, and can you tell me what the Democrats have done to compromise?” Cruz said on Meet the Press this morning.

So what does this “compromise” actually look like? For a party that has centered their platform around reducing spending and the deficit, it’s surprisingly bad economics.

First of all, repealing the medical device tax would actually add $30 billion to the deficit. That provision, which imposes a 2.3 percent tax on medical devices, is one of the funding sources for Obamacare’s coverage expansions. Proponents say that the tax will be balanced out by the influx of new Americans entering the insurance market. But getting rid of it now without finding another way to finance health reform would simply increase health reform’s price tag.

Furthermore, delaying Obamacare’s individual mandate — a central tenet of the health law that requires everyone to purchase insurance — would have catastrophic effects. The Congressional Budget Office (CBO) projects it would end up forcing Americans to pay higher premiums for their health coverage. Healthier people would be discouraged from buying insurance, resulting in an older and sicker pool of people in the individual market and encouraging insurers to submit higher rates. The delay would ultimately hike premiums by an estimated 15 to 20 percent.

And according to the CBO, a one-year delay would leave about 11 million Americans uninsured, ultimately reducing the expected coverage gains under the health reform law by nearly 85 percent. As those uninsured Americans end up seeking care in hospitals, the cost of providing that uncompensated care will offset any costs that are achieved by delaying Obamacare’s coverage expansion. Ultimately, delaying the mandate doesn’t actually save the government any money.

As Wonkblog reports, delaying the individual mandate would have a “ripple effect” throughout the health insurance industry. That sector has been preparing for impending changes under Obamacare, and a last-minute decision to delay the law would be a huge drain on the companies that have already spent millions of dollars on advertising and outreach campaigns. “It’s just too late,” Joe Antos, a health policy researcher at the American Enterprise Institute, told Wonkblog. “Everybody who is involved, insurance companies and hospitals and any other big entity, they’re ready to go. They really can’t make any changes.”

When the Affordable Care Act was winding its way through the court system last summer, a conservative federal judge made the point that suddenly striking down health reform would create “economic chaos.” And at this point, as many of Obamacare’s consumer protections have already taken effect, the individual mandate is inextricably linked to making the health reform law work in practice. A new paper from the Urban Institute notes that delaying the individual mandate would “seriously disrupt overall implementation” of health reform.

If the Senate rejects the House’s current continuing resolution — which they almost surely will — House Republicans reportedly won’t yet be ready to cease their fight against Obamacare. National Review Online reports that the House is preparing another bill that would get rid of Obamacare subsidies for members of Congress.

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