Insurance officials worry mandate repeal will damage markets

Many state insurance officials, even some in red states, are warning that repealing ObamaCare’s individual mandate in the GOP tax-reform bill would cause damage to their markets.

Insurance commissioners warn that premiums would rise, insurers could drop out of the market and more people would go without coverage if the mandate is repealed, as Senate Republicans are poised to do as part of their tax bill this week.

In addition to fulfilling a longtime GOP policy goal, repealing the mandate also helps Republicans pay for tax cuts in the bill, as the Congressional Budget Office (CBO) projects that ending the rule would save about $338 billion over 10 years.

{mosads}Tom Glause, the Wyoming insurance commissioner who was appointed by a Republican governor, said the damage would be particularly notable for people who make too much income to qualify for subsidies.

“If the mandate is repealed in the tax bill, you’ll see a lot of those people going without coverage,” Glause said.

Mike Rhoads, the deputy insurance commissioner in Oklahoma, said striking the individual mandate would “exacerbate” instability in the ObamaCare marketplace.

Without a mandate, he said, only sicker people would remain enrolled, leading to higher premiums.

“That manifests itself in a price increase,” Rhoads said.

Still, there is significant uncertainty as to how substantial the effects of repealing the mandate would be. Some experts and insurance commissioners told The Hill that the impacts have been overstated, because the requirement that people retain insurance or pay a fine was never very effective in getting healthy people to enroll in the first place.

“The mandate didn’t work,” said Michelle Osborne, North Carolina’s chief deputy commissioner of insurance. “The young people didn’t get health insurance. They’d rather pay the little tax.”

Senate Republicans argue that repealing the mandate is a form of tax relief, because about 80 percent of the people paying the penalty for lacking coverage make $50,000 or less.

The CBO predicts that premiums would rise 10 percent and 13 million more people would be uninsured by 2027 if the mandate is repealed. The CBO says it is in the process of revising down its estimate, but it is still clear that “the number of uninsured people would be millions higher.”

“A simple repeal done without implementing any cost-control measures will drive premiums up because without a mandate individuals will only purchase insurance when care is needed,” the Utah Insurance Department said in a statement. “The extent of the increase is unknown because Utah has not done any studies on the matter. However, over time, premium increases coupled with fewer healthy participants will cause the deterioration of the individual market pools.” 

Democratic insurance commissioners, such as Mike Kreidler in Washington state, have sounded even more dire warnings about the impact of repealing the mandate.

“My fear is that you’ll start us on the slippery slope of seeing market collapse,” Kreidler said. 

He noted that insurers could pull out of certain markets, potentially leaving some areas of the country with no insurer at all offering ObamaCare coverage.

Rhoads, in Oklahoma, echoed that fear, saying “there very possibly could be counties without access.”

The CBO projected that, without the mandate, markets would still be stable in “almost all areas of the country.”

Sen. Susan Collins (Maine), a moderate Republican, said that her concerns about the effect of repealing the mandate would be assuaged by passing two bipartisan bills aimed at shoring up the ObamaCare exchanges. One, from Sens. Lamar Alexander (R-Tenn.) and Patty Murray (D-Wash.), would fund key payments to insurers for two years. The other would fund “reinsurance,” government funding to help pay the costs of sick enrollees and bring down premiums. 

The CBO said Wednesday that the Alexander-Murray bill would do little or nothing to make up for repealing the mandate. Experts say that the reinsurance bill, on the other hand, could help make up for the premium increases but not undo the coverage losses.

The liberal Center on Budget and Policy Priorities argues that the reinsurance would have to be about twice as much, $5 billion per year, as the amount in Collins’s bill.

Kreidler, in Washington state, said he worked earlier this year to head off the threat of certain counties in his state having no insurer offering coverage. But with no mandate, he might not be able to lure insurers to stay in the future.

“I can’t order an insurance company to stay in the market,” he said.