The expected repeal of the ObamaCare mandate to buy health insurance means that states will soon have to step in and decide whether to create their own mandates.
The requirement that everyone must purchase insurance or pay a fine is a bedrock principle of ObamaCare, but it’s also one of the most unpopular parts of the law.
GOP leaders have tried for years to find a way to repeal it, arguing that it’s an unaffordable burden on working class Americans. Now, by including a provision that eliminates the penalty in the tax bill, Republicans are on the cusp of achieving a major legislative victory.
Outside experts and supporters of ObamaCare predict chaos in the insurance markets if the tax bill passes and the mandate is repealed.
Premiums are expected to rise significantly and insurers could leave the marketplace. The Congressional Budget Office estimated that about 13 million more people would be without insurance in 10 years.
States have the power to potentially blunt the damage if they choose to enact their own mandate penalties, but even officials in the most liberal states could face a bruising political battle.
“The idea of penalizing people for not getting insurance is controversial, even in blue states,” said Larry Levitt, a senior vice president at the Kaiser Family Foundation. “The debates on reimposing the mandate are not the same as opposing Republican efforts to repeal it. It’s a different dynamic.”
Levitt noted that the idea has split Democrats in the past. For example, in the 2008 presidential campaign, Hillary Clinton’s health plan included a penalty for being uninsured, while former President Obama’s did not.
“The mandate is the most unpopular part of the Affordable Care Act, so there are political challenges in focusing a debate on just that issue,” Levitt said. “States would have to make the case that it would stabilize the market to overcome political opposition.”
There are no legal barriers if other states want to set up their own mandates, but one of the biggest obstacles is time.
If the tax bill passes as expected early next week, states will face a rapidly ticking clock to try to stabilize their health insurance markets.
“It’s faster to destroy something than to create something. For states to create a replacement infrastructure, it takes time,” said Stan Dorn, a senior fellow at the advocacy group Families USA.
Dorn said states would need to decide how much of a penalty people would pay. There would also have to be regulations about reporting requirements, and the whole package would need to pass a state legislature.
But a former Obama administration official said the administrative costs and logistics of a state-level individual mandate shouldn’t be that complicated.
“It’s something of an operational lift, but compared to what states did to implement the ACA, it’s not that hard,” said Jason Levitis, a policy expert at Yale Law School and former senior official in the Treasury Department under Obama.
Insurers have urged Congress not to repeal the federal mandate, but so far have remained quiet about state alternatives.
To date, California, Maryland and Washington, D.C., have been having public discussions about replacing the federal mandate with a state penalty.
Massachusetts has had an individual mandate on the books since 2006, when it was enacted under the law known as RomneyCare. The Massachusetts mandate is more stringent than the federal one, so other states may not want to follow that template exactly.
Earlier this year, officials in the District of Columbia recommended continuing to enforce the mandate if the federal government stopped. While it’s not the same as enacting a state-level mandate, experts said doing so would be the next logical step.
Much of the Republican opposition to ObamaCare’s individual mandate has been on a philosophical level; they don’t want the federal government imposing a financial requirement on Americans.
But advocates worry that the partisan divide will make state disparities even worse, just like with ObamaCare’s Medicaid expansion.
“The very states that tend to have the most people in need haven’t expanded Medicaid,” Dorn said. “Not all states are going to respond, and in a lot of states we’ll see premiums jump through the roof.”
Levitis said that if the individual mandate were repealed, state Republicans would face a reckoning.
“It’s been really easy over the past eight years to attack the mandate without understanding it, but now that it’s going away … state officials will be faced with a stark reality of what the market looks like without it,” Levitis said.
“One would hope it acts as a wake-up call,” he added.