Senators have passed tax reform legislation that includes a repeal of Obamacare’s individual mandate. In this writer’s opinion, the House of Representatives, which passed its version of tax reform without such a repeal, should now follow the Senate’s lead.
The individual mandate is a gross violation of individual liberty and is not helping to make insurance more affordable.
A penalty on people who do not purchase health insurance, the individual mandate cost $695 or 2.5 percent of income (whichever is greater) for noncompliance in tax year 2017. Supporters of Obamacare claim the Constitution’s Commerce Clause gives Congress the power to force people to buy health insurance. While the Founding Fathers did give government the power to regulate commerce, nowhere did they say it could be used to require individuals to purchase insurance.
There is no basis for the individual mandate in constitutional law either. As U.S. District Court Judge Henry Hudson wrote in 2010, “A thorough survey of pertinent Constitutional case law has yielded no reported decisions from any appellate courts extending the Commerce Clause or the General Welfare Clause to encompass regulation of a person’s decision not to purchase a product.” Supreme Court Chief Justice John Roberts erred greatly when he sided with the Court’s liberals to let the individual mandate stand.
Congress now has the opportunity to correct the Court’s error and restore liberty to every American.
Supporters of Obamacare, such as Dylan Scott and Sarah Kill of the liberal website Vox, claim the individual mandate is “crucial” to the Obamacare exchanges. They note that Obamacare requires insurers to sell policies to all people regardless of whether they have a preexisting condition. However, insuring people with preexisting conditions is expensive. Requiring insurers to cover them gives young and healthy people an incentive to forgo insurance until they get sick. Under those conditions, insurers lose money. This causes them to exit the exchanges or hike premiums further.
Forcing young people onto the exchanges supposedly enables more health insurance companies to make a profit, stay on the exchanges, and keeps insurance affordable. Scott and Kliff argue that repealing the mandate could “drive some insurers out of the market.” Worse, “[p]remiums would rise, and some number of people would lose coverage.”
The problem with that argument is that the exchanges are already not working with the individual mandate in place. It never forced enough young and healthy people to join the exchanges. As a result, many health insurance companies incurred heavy losses. Over one-third of insurers have left the exchanges since they began in 2014. But that only tells part of the story. In 2014, 76 percent of exchange enrollees had at least three insurers to choose from. Only six percent had just one. Due to so many insurers leaving the exchanges, the percentage of enrollees with a choice of only one insurer will rise to 26 percent in 2018, while those with three or more insurers will fall to 48 percent.
Nor is the individual mandate keeping premiums affordable. To the contrary, premiums are skyrocketing. For example, on the federal exchanges (those run by the federal government, and not the states), the lowest cost plan for a 27-year-old will rise 17 percent for next year. The second lowest-cost silver plan will increase 37 percent. From 2014 to 2018, the lowest-cost plan for a 27-year-old has jumped from $164 per month to $248, a 77 percent increase. The second-lowest cost silver plan has risen a whopping 88 percent, from $218 per month to $411.
The fact is that the individual mandate will never work. To force enough young and healthy people onto the exchanges would require increasing the individual mandate penalty so that it equaled the average price of insurance on the exchanges, i.e., thousands of dollars. Congress will never do that for the simple reason that the individual mandate is unpopular. The Kaiser Family Foundation Tracking Poll has consistently found a large majority opposed to forcing people to buy insurance. When last polled about the mandate in November 2016, 63 percent had an unfavorable view of it.
In short, the individual mandate does not now, nor will it ever, work as Obamacare supporters claimed it would. Considering that the mandate is also a gross encroachment on individual freedom, there is no reason why Congress shouldn’t repeal it in the name of tax reform.