Sen. Orrin Hatch (R., Utah), the ranking member of the Senate Finance Committee, is prepping on that front. “By attacking the mandates, we take away the Democrats’ arguments against our calls for full repeal,” he explained to NRO last year. “Focusing on the mandates enables us to shine a light on the most unconstitutional aspects of this lousy piece of legislation. It compels them to talk specifics. Let’s remember that these mandates are the central tenets of Obamacare. Gut them and the law falls apart.”
Everyone seems to be saying that ObamaCare will fall apart without the mandates but I don’t quite understand why.
Here is the way it looks to me:
If all you wanted was to cure the adverse selection problem inherent in insurance then you could require everyone to get insurance, require insurers to offer everyone insurance at the same price and then declare victory.
However, there are also subsidies in the plan to offset the cost of insurance. Once you have subsidies the entire game changes. You effectively enroll every American taxpayer in the payment pool. Even if you don’t buy insurance yourself, you can’t get out of paying part of the tab for the nation’s health care because you can’t get out of paying taxes.
So what happens if you take away the mandate? Lets say the system unravels. More and more people drop their insurance knowing that they can just buy insurance right before they need it. This causes the price of insurance to skyrocket, which causes more people to drop out and prices to rise further and so on until almost everyone drops out.
OK, but here is where the subsidies kick in. As the price of insurance rises it becomes less affordable for the average American. To keep insurance affordable the public demands larger subsidies. So as more people drop out subsidies rise and rise.
The end game in this type of scenario is fully government financed universal health care. People only “officially” enroll in insurance right before they need it, but because they are paying taxes they are always unofficially a part of the payment pool.
Rather than destroying ObamaCare it would seem that taking away the mandate turns it into Medicare Advantage for all.
Now maybe you would say, but Congress can refuse to fund the subsidies. Yet, failing to increase subsidies would increase costs for the people who are officially enrolled, which in our scenario are the people who need immediate care.
Allowing costs to skyrocket on people who need care immediately seems like a really unpopular idea.
Now, I can see how the whole thing would be extremely embarrassing for ObamaCare supporters and how the news media would hound them about their unrealistic cost estimates.In the end, however, it seems likely that the subsidies would be provided and the system would evolve into Medicare Advantage for all.