Eliminating the Affordable Care Act’s individual mandate would increase the number of uninsured people by 13 million and decrease the federal deficit by $338 billion over the next 10 years, according to the Congressional Budget Office.
The agency’s analysis (PDF), which it released Wednesday, updates a previous estimate it issued last December that found eliminating the mandate would produce $416 billion in savings.
Why the difference in the two projections? The CBO said there are three main factors at play:
- Since the previous estimate was made, the agency has updated its baseline projections about the federal costs of subsidizing health insurance.
- The new estimate considers the fact that eliminating the individual mandate would affect Medicare’s “disproportionate share hospital” payments to facilities that serve a higher percentage of uninsured patients.
- The agency now believes that individuals’ and employers’ full reaction to the elimination of the individual mandate would probably phase in more slowly than it previously anticipated.
The CBO’s updated estimate also projected that eliminating the mandate would increase individual market premiums by 10% in most years of the upcoming decade. However, the agency said the market would “continue to be stable in almost all areas of the country” during that time period.
These new projections come as some Republicans—including President Donald Trump—are calling for a provision eliminating the individual mandate to be included in the GOP’s tax reform package. So far, such a provision hasn’t made its way into the House’s version of the legislation.
One primary argument for repealing the mandate is that many people find it preferable to pay the tax penalty for remaining uninsured than to buy coverage—especially as ACA exchange premiums rise. However, an analysis released Thursday from the Kaiser Family Foundation found that more than half of uninsured people who are eligible to buy coverage on the ACA’s marketplaces could pay less for a health plan than they pay for the individual mandate penalty.