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FILE PHOTO: U.S. Senate Majority Leader Mitch McConnell (R-KY) speaks to reporters after the Republican policy luncheon on Capitol Hill in Washington, DC, U.S. October 24, 2017. REUTERS/Joshua Roberts/File Photo - RC1CE1593BA0

Why the GOP put the individual mandate in its tax plan — and what it means for health care

Senate Republican leaders said Tuesday they would add a repeal of the individual mandate in the Affordable Care Act to their tax reform plan. The move could help ease the tax bill’s passage in the Senate, but it has also revived the contentious debate over health care.

What is the individual mandate?

It’s a provision in the health care law that requires most Americans to have health insurance or pay a penalty. The penalty in 2017 for not having health coverage is $695 for adults and $347.50 for children, or 2.5 percent of a person’s household income, whichever is higher.

What’s the purpose of the mandate?

Proponents of the mandate say it’s essential to the Affordable Care Act because it pushes younger and healthier people to get covered, helping lower the overall cost of insurance in health care exchanges. (The idea being that having more younger, healthier people insured spreads the risk pool and offsets the higher costs of covering older and sicker people). But the mandate, which took effect in 2014, has always been one of the least popular parts of the health care law, with critics arguing that it infringes on Americans’ right to make their own health care decisions.

What’s the impact of repealing the mandate?

It would save $338 million over the next 10 years, according to the Congressional Budget Office, because the government would spend less on health care subsidies. Senate Republicans said they would use the savings to help pay for middle class tax cuts in their tax proposal. But the CBO’s report last week also found that eliminating the mandate would result in 13 million people losing their insurance by 2027, and would increase the average cost of ACA premiums by 10 percent.

What the health care industry says:

On Tuesday, hospital, doctor and health insurance groups sent a letter to Congress echoing CBO’s findings: “Eliminating the individual mandate by itself likely will result in a significant increase in premiums, which would in turn substantially increase the number of uninsured Americans,” the groups wrote. Democrats have also come out against the proposal.

Republicans’ argument:

Senate Majority Leader Mitch McConnell, R-Ky., defended the idea in a speech Wednesday on the Senate floor: “The goal is to repeal an unpopular tax from an unworkable law in order to provide more tax relief to middle-class families,” McConnell said.

One complication: the Murray-Alexander deal

Senate Republicans also said Tuesday they would move forward with a bipartisan health care plan crafted by Sens. Lamar Alexander, R-Tenn., and Sen. Patty Murray, D-Wash. The deal would extend cost-sharing subsidies under the Affordable Care Act through 2019, and give states flexibility to opt out of some of the law’s regulations. President Donald Trump announced last month he would end the subsidies, which helps cover out-of-pocket costs like deductibles and copays. Democrats largely support the deal. But Murray said Tuesday she opposed adding it to a tax plan that eliminates the mandate. “Tacking Alexander-Murray onto the partisan Republican tax reform effort is like trying to put out a fire with penicillin,” she said.

Will the mandate repeal help Republicans pass tax reform?

It might, but the politics are complicated. The plan could win over conservative senators who would love to dismantle a core part of former President Barack Obama’s health care law. But it risks alienating some moderate Republicans who opposed the party’s health care repeal efforts earlier this year. As Sen. Susan Collins, R-Maine, said Tuesday: “I personally think that it complicates tax reform.” That’s likely true, but including the mandate repeal in the tax bill — which the GOP can pass on a party-line vote without Democrats — is the Republicans’ best shot right now at a partial repeal.

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