Higher premiums would cancel out some tax cuts
Repealing the individual mandate in the tax bill would increase premiums for people without subsidies.
Some people's tax cuts under the GOP Senate bill would be canceled out by the increased premiums they would face due to the repeal of the Affordable Care Act's individual mandate, according to an analysis by The Commonwealth Fund. And, for those roughly 7 million people who buy insurance on their own but don't get premium subsidies, high health care costs would endure even after the bill's tax cuts expire.Data: The Commonwealth Fund; Chart: Lazaro Gamio / Axios
Why this matters: This is the downside of repealing the individual mandate in the tax bill. Although doing so provides savings to help pay for the bill's tax cuts, on balance, the bill would leave millions of middle-income Americans worse off financially.
Experts almost universally agree repealing the individual mandate is bad for the marketplace. Photo: Carolyn Kaster/AP
Experts across the political spectrum generally agree that the Affordable Care Act's individual mandate is both necessary for market stability, and probably not working as well as its authors intended.
The bottom line: Almost everyone agrees that repealing the mandate now, without a replacement, will make insurance markets function substantially worse than they are today. But many experts believe other policies might be just as effective, if not more so, at getting healthy people into the system and thus moderating premium increases.
The Senate Finance Committee's markup of the tax bill yesterday fixated on new tables from the Joint Committee on Taxation showing that, even before the lower individual rates expire, people with lower incomes would pay higher taxes.
Data: The Joint Committee on Taxation; Note: Nov. 9 proposal didn't include a repeal of the individual mandate or sunsets of the individual rates. Nov. 14 proposal included both. Chart: Andrew Witherspoon / Axios
The bottom line: Economists say this is mostly because the revised bill repeals the Affordable Care Act's individual mandate — so some people wouldn't buy health coverage, and therefore wouldn't get the tax credits to subsidize it.
Be smart: What this table is showing is lower-income people's taxes going up, in JCT's calculations, because some of them are no longer receiving the ACA premium subsidies. "This is all negative taxes disappearing. It's not like they have to write a check to the government in any way," said Doug Holtz-Eakin, president of the American Action Forum.
Go deeper: While there are other serious policy questions regarding repealing the mandate, Republicans do have a point when they say these people are choosing to give up their health coverage.
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Sen. Ron Johnson said Wednesday he opposes the tax bill. Photo: Susan Walsh/AP
Parts of the Senate's tax bill — like the repeal of the Affordable Care Act's individual mandate and the sunset of the individual and small business tax cuts despite a permanent corporate tax cut — are endangering its passage.
Our thought bubble: Sen. Ron Johnson's declared opposition and the sudden prospect that the GOP could lose a Senate race in Alabama next month giving them only one vote to spare if the tax bill takes longer than a few weeks, have increased the odds of the tax bill's success. Driving Republicans forward is the intense pressure they face for a legislative victory.
Here's a rundown of where important senators stand on the bill:
The health care trio: These three senators sunk the health care bill in July. Inserting an individual mandate repeal into the tax bill has thrown their votes for it into question.
Sen. Ron Johnson and Roy Moore:
The House is expected to vote on its rewrite of the tax code today, and the Senate Finance Committee could approve its version by the end of the day. Here are the main things you need to know.
An updated version of the tax bill was released. Photo: J. Scott Applewhite/AP
Senate Finance Committee Chairman Orrin Hatch released the revisions to the Senate tax plan tonight. The new version sunsets most of the individual tax provisions after 2025, but makes the lower corporate tax rate permanent. It also repeals the Affordable Care Act's individual mandate.
What we're watching: Whether ending individual tax cuts — as well as repealing the individual mandate — while keeping the lower corporate rate sinks the bill. Making the rates temporary was done to make the bill comply with Senate budget rules for the process the GOP is using to pass the bill.
What else is in the new bill:
The Senate tax bill will repeal the individual mandate. Photo: J. Scott Applewhite/AP
The Senate plans to include a repeal of the Affordable Care Act's individual mandate in its tax bill. As part of the deal, the bipartisan ACA stabilization bill introduced by Sens. Lamar Alexander and Patty Murray will get a separate vote on the Senate floor.
"We're optimistic that inserting the individual mandate repeal would be helpful, and that's obviously the view of the Senate Finance Committee Republicans as well," Senate Majority Leader Mitch McConnell told reporters.
What to watch: Whether a tax bill that repeals the individual mandate can get 50 votes. If it's part of the package, odds are the answer is yes. But this definitely escalates the tax bill's drama — especially if and when the House and Senate must reconcile their versions.
Photo: J. Scott Applewhite/AP
Senate Republicans are actively discussing whether to repeal the Affordable Care Act's individual mandate in their tax bill. Sens Rob Portman and Pat Toomey presented on the issue during today's caucus lunch, after Toomey and Sen. John Thune made the pitch in meeting of Finance Committee members last night.
Sen Rand Paul also announced today he plans to introduce an amendment repealing the mandate. In an interview, Sen Tim Scott said there's probably strong member support for repeal, potentially even among all 14 GOP members of Finance, and confirmed that the policy was discussed at last night's Finance meeting.
Be smart: Of course there's strong member support to repeal the mandate. The question is whether there are 50 votes to include it in the tax bill.
— This post has been updated.
Most taxpayers will either pay less or see little change under the Senate tax bill, but millions will pay more — some substantially more, according to an analysis of Joint Committee on Taxation data by the left-leaning Center on Budget and Policy Priorities.
Data: Center on Budget and Policy Priorities; Chart: Chris Canipe / Axios
Why this matters: Every tax bill creates winners and losers. While there are more winners under the Senate plan, each member will have to decide whether to vote for it knowing that some people will be made worse off.
The House bill's tax changes are higher for the wealthy. Photo: J. Scott Applewhite/AP
Almost half of net federal tax cuts under the committee-passed House tax bill would go to the top 1 percent of earners by 2027, although all income groups would see an average tax decrease under the bill, according to an analysis by the Tax Policy Center. The House plans to vote on the bill this week.
Be smart: You're going to hear different narratives over and over again this week. Democrats are going to say this bill is a giveaway to the wealthy, Republicans are going to say everyone is better off under the plan, and conservative wonks are going to (quietly) argue that cutting taxes on the wealthy and businesses is the way to boost the economy, benefiting everyone.