Republican Plan to Delay Obamacare’s Individual Mandate Would Save $31 Billion — CBO

It would also, the budget office estimates, raise premiums and result in 13 million fewer people gaining access to health insurance.

Rocky rollout: HealthCare.gov.
(C)2012 RICHARD A BLOOM
Clara Ritger
March 12, 2014, 8:54 a.m.

The Re­pub­lic­an plan to delay Obama­care’s in­di­vidu­al man­date in or­der to pay for a fix to a broken Medi­care pay­ment sys­tem would save the gov­ern­ment $31 bil­lion, the Con­gres­sion­al Budget Of­fice said Wed­nes­day.

The delay would also res­ult in 13 mil­lion few­er people hav­ing health in­sur­ance by 2018, CBO said. Fur­ther, health in­sur­ance premi­ums would be 10 per­cent to 20 per­cent high­er in 2018, CBO pro­jects.

The House is sched­uled to vote Fri­day on the le­gis­la­tion, which would re­place Medi­care’s pay­ment for­mula for doc­tors.

The cur­rent for­mula calls for ever-in­creas­ing cuts that Con­gress al­ways delays, an an­nu­al ritu­al known as the “doc fix.” And law­makers have spent years look­ing for a low-cost, per­man­ent solu­tion and an end to the cycle of short-term patches.

Re­pla­cing the for­mula would cost $138 bil­lion over the next dec­ade, ac­cord­ing to CBO, and Con­gress has been di­vided over how to pay for it.

Re­pub­lic­ans want to off­set that spend­ing — as well as save an ad­di­tion­al $31 bil­lion — by delay­ing the Af­ford­able Care Act’s in­di­vidu­al man­date for five years. If the delay were put in place, the CBO pro­jects the gov­ern­ment would spend about $170 bil­lion less over a dec­ade, mostly be­cause it would spend less on Medi­caid and on tax sub­sidies aimed at help­ing people cov­er the cost of their premi­ums.

The Re­pub­lic­an bill is a polit­ic­al mark­er, but it has no chance of be­com­ing law so long as Demo­crats con­trol the Sen­ate and Pres­id­ent Obama re­mains in the White House.

The in­di­vidu­al man­date is a key piece of the Af­ford­able Care Act. Without it, in­di­vidu­als would only have in­cent­ive to buy in­sur­ance after they’re sick. And be­cause the law bars com­pan­ies from ex­clud­ing people with such “preex­ist­ing con­di­tions,” the in­di­vidu­al in­sur­ance mar­ket would likely be filled with ex­pens­ive cus­tom­ers and lack healthy ones — mak­ing the ex­changes some­where between un­friendly and un­sus­tain­able for private in­surers.

The GOP pro­pos­al has also pushed back sub­stant­ive ne­go­ti­ations on the per­man­ent doc fix. Poli­cy­makers on both sides of the aisle have been try­ing to ham­mer out a deal to re­peal and re­place what is known as the SGR for­mula for over a year.

Con­gress has to find a way to pay the SGR’s $138 bil­lion price tag by March 31, or else doc­tors who provide ser­vices to Medi­care be­ne­fi­ciar­ies face an auto­mat­ic 20 per­cent pay cut.

Le­gis­lat­ors could also pass an­oth­er tem­por­ary doc fix, which they’ve done each year since 2003 to stop the auto­mat­ic cuts im­posed by the SGR for­mula. But that Band-Aid solu­tion would an­ger key stake­hold­ers, who have in­tensely lob­bied the Hill to come up with a real fix.

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