The new Tax Cuts and Jobs Act eliminates the ACA’s individual mandate to maintain minimum essential coverage, and the penalty for failure to do so, effective in 2019. While President Trump tweeted that this “effectively repealed” the entire ACA, its impact may be much more limited.

Effect on Employers

Employees free of the individual mandate could decline coverage under an employer’s plan after 2018. However, that option may not be available because most employer plans currently require proof of other coverage before allowing an employee to waive coverage. Allowing (presumably healthy) employees to drop coverage would likely cause employer premium costs to increase. Eliminating the individual mandate could also indirectly affect compliance with the employer mandate.

Penalties under the employer mandate are triggered by employees that purchase subsidized coverage in the individual market. If fewer employees enroll in the individual market, then an employer that does not offer affordable coverage is marginally less likely to have an employee who will receive subsidies and trigger an employer penalty. An employer willing to violate the employer mandate because of the reduced risk of penalties would presumably wait until 2019 to reduce its coverage.

Effect of Repeal on Individual Market

Repeal of the unpopular individual mandate  is expected to further weaken the individual health insurance market, which was already under siege. See our Update #10 here. The repeal is projected by the CBO to save hundreds of millions of tax dollars by reducing subsidies and Medicaid costs due to large numbers of individuals going without insurance. On the other hand, repeal of the ACA’s “stick” is only part of the equation; as long as premium subsidies remain in place, millions will still find Exchange coverage attractive, even if the lack of a mandate causes premium increases.

Some states are reportedly looking at adopting their own individual mandates, like Massachusetts has. In any case, the greatest increase in coverage under the ACA has been from expanded Medicaid coverage, now adopted by 32 states. Maine adopted expanded Medicaid coverage by voter initiative and other states like Idaho may do the same in 2018.

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