Roughly 2 million people could get kicked off of coverage, not 13 million
Let’s put into perspective the coverage number losses estimated by the Congressional Budget Office (CBO).
CBO estimates that 13 million people would become uninsured by 2027 due to repeal of the individual mandate: 2 million people would no longer be covered by an employer-sponsored plan, 5 million people would no longer be covered under Medicaid, 5 million would no longer be covered by an individual market plan, and the remaining 1 million appear to come from the Basic Health Program.
No one has – nor will – argue that repeal of the individual mandate impacts employer-sponsored coverage, or increases premiums for employer plans. This means that the estimated 2 million people would be making their own rational choice not to obtain coverage under an employer plan. They are not getting kicked off of coverage.
CBO estimates that 5 million people would no longer be covered under Medicaid. Medicaid coverage is free to eligible enrollees, and repealing the individual mandate – through the pending tax bill – would not impact the Medicaid program as it currently exists. So why is CBO estimating that 5 million people would no longer be covered under Medicaid? Because it appears that eligible enrollees would simply choose not to enroll in Medicaid coverage.
It is 100 percent fair to argue that: (1) The current administration – and future administrations – would not properly engage in outreach efforts to encourage people to enroll in Medicaid and (2) The lack of encouragement to enroll – and the stigma of being covered under Medicaid – would result in fewer people enrolling. I think that is a bad thing, and I think our federal government should do everything it can to help low-income individuals access health coverage. As provocative as it may sound, however, doing a poor job of encouraging people to obtain free coverage through Medicaid is not kicking people off of coverage.
Individual Market Coverage
This is where it gets a bit weedy. CBO estimates that by 2027, 5 million people in the individual market would no longer be insured. Out of this 5 million, how many people would be eligible to receive a premium subsidy? To isolate the number of subsidy-eligible people, divide the savings produced by repeal of the mandate in 2027 by the average premium subsidy in 2027.
CBO estimates that the average premium subsidy in 2027 would be $8,610 (see page 11 in this CBO report). CBO also estimates that repeal of the mandate would save $28 billion in 2027 (see page 2 in this CBO report). $28 billion divided by $8,610 results in 3.25 million. So, out of the 5 million people without an individual market plan in 2027, 3.25 million of them would be subsidy-eligible.
It is well-accepted that the premium subsidies absorb any premium increases in the individual market, meaning subsidy-eligible individuals are never affected by annual premium increases. So, similar to our discussion about people choosing not to enroll in Medicaid, it appears that the 3.25 million people who are subsidy-eligible would be choosing not to enrolling in heavily subsidized coverage. Again, you can argue that the current administration – and future administrations – would not properly engage in outreach efforts to encourage people to enroll in a subsidized individual market plan. But again, that is not kicking people off of coverage.
Now, what about the remaining 1.75 million people who would no longer be covered by an individual market plan? It appears that these people would not be eligible for the premium subsidy. Which means, these people would bear the full brunt of the 10 percent premium increases that CBO projects. A strong argument can be made that these people are getting priced out of the market due to repeal of the mandate. If these people are getting priced out of the market, it is reasonable to say that they are getting kicked off of coverage.
So, to put things into perspective: 1.75 million is a lot less than 13 million.
Christopher E. Condeluci is principal of CC Law & Policy and former counsel to the Senate Finance Committee.