The ACA Hit List for the New Congress: A Prescription for Big Premium Hikes

In January the U.S. Senate will have new leadership, dedicated to the repeal of the Affordable Care Act (ACA). Senator Mitch McConnell, the expected majority leader, thinks the ACA is a “hopelessly flawed law that Americans have never supported.” But the soon-to-be Senate leader recognizes that President Obama will veto any repeal attempt, so he announced that he would instead focus on rolling back specific provisions of the law he identifies as unpopular. Top on his hit list is the individual mandate, which requires people to maintain health insurance coverage or face a tax penalty.

Senator McConnell does not include the ACA’s consumer protections and market reforms on his hit list for repeal. One of the longstanding ironies of the ACA is that while the law itself performs poorly in public opinion polls, its individual provisions are widely popular. So in spite of his desire to throw out the whole law, Senator McConnell probably recognizes that repealing key provisions like the law’s ban on pre-existing condition discrimination, the ability to keep young adults on their parents’ plan, or the rating, benefit and cost-sharing protections, could face a significant consumer backlash. And he’s not talking about taking away the financial assistance that makes health insurance more affordable for millions of families. These provisions are not only popular, they are making a real difference in the lives of real people. But we should probably expect this kind of cognitive dissonance from the Senator who, while calling for the ACA to be “pulled out, root and branch,” told his constituents that they could keep Kynect, Kentucky’s successful health insurance marketplace.

The problem is, you can’t have your cake and eat it too. Just ask the state of New York, the poster child for why an individual mandate is critical to keeping premiums in check. Back in the early 1990s, New York required insurers to sell to all comers, regardless of health status, but they didn’t require healthy people to maintain health coverage. As a result, premiums went through the roof, insurance companies stopped selling, healthy people dropped out, and the individual market all but collapsed. It was the proverbial insurance “death spiral.”

Although unlikely to overcome a Presidential veto, if the new Congress succeeds in repealing the individual mandate, but maintains the ACA’s popular consumer protections and market reforms, we could face a similar death spiral. The Congressional Budget Office (CBO) has projected that a repeal of the individual mandate would result in 13 million fewer people being insured by 2018 and premium increases between 10 and 20 percent, compared to current law. Now that’s an approach that’s “hopelessly flawed.”

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