Congressional auditors said Friday the House-passed bill to delay by one year the individual mandate at the heart of President Obama’s new health care law would reduce federal deficits by about $35 billion over the next decade.
The Congressional Budget Office said the government would spend $28 billion less on things like expanded Medicaid enrollment and premium tax credits and see $7.4 billion in revenues from greater taxable income if the mandate requiring most Americans to have health insurance does not start until 2015, instead of 2014 as planned.
Republican critics of the Affordable Care Act have cried foul over the mandate since its inception in 2010, saying the Obama administration cannot force the American public to buy a product.
The Supreme Court, however, upheld the mandate under Congress’ taxing authority in its landmark June 2012 ruling on the law.
Since then, the White House has delayed by one year, to 2015, a mandate requiring larger employers to offer adequate health coverage or pay fines.
The House, buoyed by its Republican majority, voted in July to codify the delay and match it with a one-year delay of the mandate on individuals. But the legislation is unlikely to come up in the Democratic-controlled Senate and President Obama has said he would veto the measures.
The individual mandate, if enacted, would increase the number of people entering the Medicaid and Children’s Health Insurance Program and compel people to take advantage of employer-based insurance and government subsidies on state-based insurance markets that will begin enrollment this fall.
Absent the mandate, the CBO says the number of uninsured Americans will increase from about 44 million to 55 million, because 5 million fewer people will enroll in Medicaid of CHIP, 4 million fewer people will gain employer-based coverage and 2 million fewer people will get coverage through the state markets, or “exchanges.”
The government would spend $16.9 billion less on Medicaid and CHIP during 2014-2023 from fewer people enrolling, particularly in 2014, and spending on premium and cost-sharing subsidies on the exchanges would decrease by $8.9 billion, the CBO estimated.
The net increase in revenue is in part due to fewer people taking up employer-based health coverage.
“That change would lead to a larger share of total compensation taking the form of taxable wages and salaries and a smaller share taking the form of nontaxable health benefits,” the CBO said.
It would bring in $12.2 billion in the 10-year period, but the government would lose out on about $5.9 billion revenue from penalties associated with people who flout the mandate, according to the projections.
Other, smaller effects would account for the remaining $1.1 billion net increase in revenues.
The CBO did not study the potential effects of delaying the employer mandate, since the legislation simply codifies what the Obama administration already put in place.
Auditors said a delay in the mandate could result in higher health premiums on the individual market, since older, sicker consumers would still be likely to take advantage of restrictions in the law and its subsidies. However, it thinks enough younger, healthy people would want to take advantage of subsidies and “the market would not be subject to an unsustainable spiral of rising premiums.”
Continuing its scrutiny of the Mr. Obama’s law, the House Republican leadership is poised to call up a bill next week that would require the Obama administration to solidify its process for verifying household income before it starts to dole out government subsidies under the new health care law.
The House Rules Committee is scheduled Tuesday to set a framework around debate on the bill sponsored by Rep. Diane Black, Tennessee Republican.
The bill would require the secretary of the Department of Health and Human Services to certify to Congress there is a verification system in place before premium tax credits are given to people seeking health plans on state exchanges set up this fall by Obamacare.
Republicans are concerned about prior signals from the Obama administration that it would allow enrollees in exchange to “self-certify” their incomes, at least during the first year of implementation.
Gary Cohen, deputy director of the Centers for Medicare and Medicaid Services, told the House Ways and Means Committee in early August that the administration is establishing ways to verify applicants’ income.
“We’re going to be sampling 100 percent. There’s new information,” he said at the time.
• Tom Howell Jr. can be reached at thowell@washingtontimes.com.
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