The Consequences Of Using The Individual Mandate As A Trigger In Debt Ceiling Negotiations

The the final debt ceiling package may serve as a reminder of President Obama’s shaky commitment to individual health insurance mandate, a central provision of the Affordable Care Act that he opposed while campaigning for office. “It’s true that some people could game the system by just waiting till they get sick and then they show up,” Obama admitted in 2008. “But keep in mind that my plan also says children will be able to stay on their parents’ plan up until the age of 25. And so I don’t believe that there are a whole bunch of folks out there that will not get coverage.” He claimed that people who can’t afford insurance shouldn’t be required to purchase it and dismissed economists who argued that allowing individuals to remain uninsured would encourage younger and healthier Americans to avoid buying insurance and drive up the costs of coverage.

This morning, NBC’s First Read reported that President Obama may be pivoting back to his campaign position in the contentious debt ceiling negotiations and agreeing to eliminate the individual mandate if Congress can’t produce a long-term entailment and tax reform package:

The Obama White House and House Speaker John Boehner are now this close to reaching a “grand bargain” deal. That framework includes spending cuts, plus entitlement changes and increased tax revenues (as part of a tax overhaul) that would come later. But there are two big hurdles left: 1) on the substance, and 2) on soothing egos. On the substance, the most contentious matter is how you “trigger” the provisions to guarantee completing tax and entitlement reform. The Democrats have offered a trigger of letting the Bush tax cuts expire for those making $250,000 or more. Republicans, meanwhile, have countered that if those Bush tax cuts are hanging in the balance, they’d offer a trigger of their own to ensure Dem action: scaling back Obama’s health-care law and eliminating the mandate. Bottom line: If entitlement and tax reform is completed on time, then the Bush tax cuts and the health-care law don’t get touched.

Repealing the mandate would take much of the health care law down with it. The first to go would be the popular consumer protections that require insurers to provide coverage for people with pre-existing conditions and prohibit them from pricing older people out of the market. Without younger and healthier people paying monthly premiums — and why would anyone spend their healthier years writing out a monthly premium check if the neighbor across the street can obtain the same coverage for the same rate on a need-it-now basis — costs would skyrocket, forcing the government to spend more on subsidies and increasing premiums for millions of beneficiaries. After New Jersey attempted to eliminate preexisting conditions without a universal mandate in 1993, for instance, the cost of the most generous individual insurance plans rose by more than 350 percent. In Maine, many insurance providers doubled their premiums in three years or less and New Hampshire experienced an exodus of insurers.


And so tinkering with the coverage provision or even offering it up as a possible trigger, would not only deliver a victory to opponents of reform, but it would also roll back the coverage expansions in the Affordable Care Act — one study found that a plan similar to the ACA that excluded a mandate would cover less than 20 million uninsured. That would not only undermine the Democrats’ historic accomplishment, but it would also erect the very kind of price barriers that candidate Obama warned against and promised to eliminate as President.