WASHINGTON, D. C. - Now that the U.S. House of Representatives has approved its controversial plan to revise the tax code, the tax debate shifts to the U.S. Senate.
Unlike the House plan, the pending Senate overhaul would rescind the Affordable Care Act's "individual mandate," which imposes tax penalties on those who forgo buying health insurance.
If the Senate bill ends up quashing the individual mandate, the provision will likely wind up in the final package both legislative bodies consider because the idea has widespread backing from House Republicans, as well as President Donald Trump.
What is the individual mandate?
The Affordable Care Act requires Americans to buy health insurance or pay penalties. The point of the mandate is to make sure healthy people are in the insurance pool, so premiums will be lower for plans in the Obamacare marketplaces.
Those who fail to buy insurance face a variety of tax consequences under the law. Some end up paying fees of $695 for each adult, and $347.50 for each child under 18 who isn't covered, with a maximum family charge of $2,085. Others pay 2.5 percent of their income, not to exceed the total yearly premium for the national Bronze plan sold through the marketplace. The law requires taxpayers to pay whichever option ends up costing more money.
Why do people want to repeal it?
The individual mandate and the penalties it imposes were never popular with those who don't want to buy insurance. Republican foes of the Affordable Care Act, including President Donald Trump and Ohio Sen. Rob Portman, say it's not fair to penalize people for not buying insurance.
Portman says many of those who pay the penalty simply can't afford coverage. According to Portman, 84 percent of penalized Ohioans have yearly family incomes under $50,000. He says repealing the mandate would provide "double tax relief" to low- and middle-income families, and notes eligible individuals who want to buy insurance would still get tax credits to help pay for it.
Portman also observes that the Joint Committee on Taxation estimates that reducing the individual mandate tax penalty to zero will raise $318 billion over 10 years, which frees up money for other tax cuts.
What are the drawbacks?
Ohio's Democratic U.S. senator, Sherrod Brown, has a different take on eliminating the mandate. He says it will result in 13 million fewer Americans with health insurance around the nation and a 10 percent premium increase for those who retain coverage.
What's more, he insists that repealing the mandate would boost health insurance premiums so much that it would eat up any tax cuts the bill provides. His office said a 27-year-old individual who makes $25,000 a year would end up $55 in the hole, with a $340 tax cut that's cancelled out by a $395 increase in health insurance premiums, if the person chose to buy insurance.
"Tax reform should be about cutting taxes for working families, not raising the cost of their health insurance," said a statement from Brown. "It's outrageous that Senators, whose own healthcare is paid for by American taxpayers, would try to take healthcare away from working families in order to cut taxes on corporations that send jobs overseas."
How would Ohioans be affected?
Americans for Tax Reform, a conservative organization that favors repealing the individual mandate, says 235,570 Ohio households paid the Obamacare individual mandate tax in the 2014 tax year, the last year for which statistics were available.
If the mandate is repealed, they'd be off the hook. But other Ohioans would likely end up losing care or paying more for insurance.
The left-leaning Center for American Progress think tank released a state-by-state analysis that predicted the mandate's repeal would cause 433,000 Ohioans to lose their health insurance by 2025. It said eliminating the mandate would raise 2019 insurance premiums in Ohio by $1,480 for a benchmark plan that would cover a family of four with an income too high to qualify for premium tax credits. They said it would also cut Medicare funds to Ohio by more than $1 billion in 2019.
In a letter to House and Senate leaders, a coalition of health insurers, hospitals, and medical providers argued the individual mandate is "one of the primary incentives" that encourages individuals to buy coverage.
"Repealing the individual mandate without a workable alternative will reduce enrollment, further destabilizing an already fragile individual and small group health insurance market on which more than 10 million Americans rely," said the letter signed by groups including America's Health Insurance Plans, the American Medical Association and the American Hospital Association.
The upshot
If the individual mandate is repealed, healthy people who don't want to buy insurance would come out ahead financially because they wouldn't have to pay a penalty for failing to buy insurance. But if they get sick or injured, they'd have to pay any medical expenses they accrue without insurance assistance.
Those who want coverage would end up paying higher premiums without the mandate because fewer healthy people in the pool will drive up average costs.