What happens to the ACA without the individual mandate

The Republican tax cut plan, including a repeal of the Affordable Care Act’s individual mandate, has passed through Congress, giving the party a victory in its yearlong struggle to find consensus on legislation to substantially alter the ACA.

The Senate passed the bill 51-48 early in the morning on Dec. 20. Later in the day, it passed the House 224-201, with 12 Republicans joining all Democrats in voting no. In a Cabinet meeting at the White House, President Donald Trump claimed eliminating the mandate means the tax bill is a repeal of the ACA.

“Because they get their money from the individual mandate,” Trump told reporters. “Obamacare has been repealed in this bill.”

As pointed out by the Associated Press, that’s far from the truth. The other major components of the law—from premium support subsidies to banning insurers from denying coverage based on pre-existing conditions to the employer mandate—are all still intact. Additionally, the penalties collecting from those who choose to remain uninsured total would $3 billion this year—the entire cost to the federal government for the ACA and its associated program is about $117 billion.

While several Republican senators had voted against larger repeal-and-replace plans earlier in the year, the entire caucus supported repealing the mandate. This included Sen. Susan Collins, R-Maine, an opponent of the earlier efforts, got behind the bill after “securing commitments” from Republican leaders to mitigate the impact of eliminating the mandate through two other bills—the Alexander-Murray proposal to fund cost-sharing reduction subsidies for insurers while loosening the ACA’s state waiver standards and her own legislation authorizing new reinsurance funding.

Those actions may cancel out the premium hikes and coverage losses expected in a mandate-less individual market, according to separate analyses from Avalere Health and Oliver Wyman. But after the Senate vote, Collins said those bills would now have to be pushed off into 2018.

No Democrats voted for the bill, with several pointing to the impact of eliminating the mandate as projected by the Congressional Budget Office: 13 million more uninsured by 2027 and a 10 percent increase in premiums, though it did project a stable market without the mandate.

The move would also decrease the federal deficit by $338 billion, the CBO said, though some federal costs would increase. For example, the CBO estimated CMS would have to pay out $44 billion more in Disproportionate Share Hospital (DSH) funds as more uninsured patients seek care at hospitals.

Other impacts could include:

• A higher-risk pool for the ACA exchanges which could lead insurers to exit the individual market over “losses and solvency” concerns, according to the American Academy of Actuaries.
• Short-term pressure on hospital credit ratings, according to Fitch Ratings.
• Uncertainty over future premium hikes, as some insurers say the availability of premium support subsidies will keep customers in the market.
• State-level mandate replacements mirroring what was required in Massachusetts—a plan which was used as a model for the ACA.
• About three million people opting not to take employer-sponsored coverage, a “drop in the bucket” in the group market, Kaiser Family Foundation vice president Larry Levitt told Axios.

While the reversal of coverage gains made under the ACA wouldn’t be immediate—the CBO projected 4 million more people would be uninsured by 2019—certain healthcare organizations will have to contend with an increase in uncompensated care costs.

“Take a set of safety net hospitals or community organizations, they’re going to have a higher exposure to that bad debt versus a specialty care organization,” Gurpreet Singh, U.S. health service sector leader for PricewaterhouseCoopers, told HealthExec.