Aaron Colen

Congressional Republicans are considering ending the Obamacare individual mandate as a part of a tax reform package.

If they do, it will save the government a lot of money.

How much?

The Congressional Budget Office reported today that repealing the mandate would cut the deficit by $338 billion over the next 10 years.

So it’s a no-brainer, right?

Not exactly. The downside is that ending the mandate would result in 13 million more uninsured people in 2027 than there are today.

Explain what the ‘individual mandate’ does?

The individual mandate requires most American to purchase health insurance. Some people are exempt from it, like those with religious objections.

The idea was that making everyone pay for healthcare was the only way to keep Obamacare premiums low. Without the mandate, some people (like healthy people who don’t think they need insurance) wouldn’t pay for healthcare.

How do you make someone buy health insurance? By penalizing them if they don’t.

In 2017, the penalty is either 2.5 percent of household income or $695 per adult/$347.50 per child; whichever is higher.

Why would ending the mandate cut the deficit so much?

While the government would lose about $31 billion over the next 10 years from lost fines, it would make that money back many times over by spending less on Medicaid and subsidies.

Read the CBO’s report here.