Congress passed the tax bill this week and it awaits the president’s signature. As expected, it included a provision effectively repealing the Affordable Care Act (ACA) requirement that most individuals have health insurance or face a tax penalty by reducing the penalty to $0. While this is not ACA repeal – the law’s state marketplaces, subsidies, and pre-existing condition protections, as well as the Medicaid expansion and many other reforms are still in force – it will chip away at the Obama-era law by eroding coverage gains and increasing premiums for the people who stay covered after the penalty disappears in 2019.

According to the Congressional Budget Office (CBO) repealing the individual mandate will lead to 4 million fewer people with health insurance in the first mandate-free year, and 13 million fewer in 10 years. It will hurt the individual market because without the mandate fewer healthy people will sign up. With fewer healthy people, the risk pool will become sicker and premiums will rise. CBO says premiums will increase about 10 percent each year over the next 10 years because of the loss of the mandate. As premiums rise, more people will forgo health insurance because it’s too expensive. And the people who stay might have fewer choices if insurance companies decide to stop selling their policies in increasingly uncertain marketplaces.

CBO also expects that fewer people will be insured because fewer people will be enrolled in Medicaid. Some people who seek out coverage to comply with the mandate discover that they’re actually Medicaid eligible. And fewer people will take up offers of job-based coverage without a mandate pushing them to have health insurance.

The final bill dropped a provision in the House-passed version that would have scrapped the deduction for people with high medical expenses. Instead, it temporarily makes the deduction easier to reach: people will be able to claim it after spending 7.5% of income on medical expenses, instead of 10%, in 2017 and 2018.

On Thursday afternoon the House voted to block automatic Medicare cuts triggered by the tax bill’s deficit increase. The "pay-go" waiver was attached to legislation funding the government through January 19. Without a waiver, “pay-go” rules requiring reductions in revenue to be met with cuts in spending would require a $25 billion cut to Medicare in 2018.      


Meanwhile, the GOP sponsors of a pair of bipartisan bills meant to reduce premiums in the individual market announced this week that Congress won’t take up their bills in 2017. They might end up attached to a large government spending bill in January.

Alexander-Murray would fund the cost sharing reduction (CSR) payments that the president cut off in October, make it easier for states to waive some ACA requirements to experiment with new ways of managing the individual market, pay for consumer outreach and enrollment assistance, and expand the availability of low-premium catastrophic plans. Collins-Nelson would reinstate funding for reinsurance, which pays a portion of the cost of covering enrollees with expensive conditions. Senators Alexander and Collins said an independent analysis found that their bills would reduce premiums by about 20 percent for individual market enrollees who get no government subsidies.