CBO: Republican Plan to Delay Obamacare's Individual Mandate Would Save $31 Billion

Jon Elswick/AP File Photo

The Republican plan to delay Obamacare's individual mandate in order to pay for a fix to a broken Medicare payment system would save the government $31 billion, the Congressional Budget Office said Wednesday.

The delay would also result in 13 million fewer people having health insurance by 2018, CBO said. Further, health insurance premiums would be 10 percent to 20 percent higher in 2018, CBO projects.

The House is scheduled to vote Friday on the legislation, which would replace Medicare's payment formula for doctors.

The current formula calls for ever-increasing cuts that Congress always delays, an annual ritual known as the "doc fix." And lawmakers have spent years looking for a low-cost, permanent solution and an end to the cycle of short-term patches.

Replacing the formula would cost $138 billion over the next decade, according to CBO, and Congress has been divided over how to pay for it.

Republicans want to offset that spending—as well as save an additional $31 billion—by delaying the Affordable Care Act's individual mandate for five years. If the delay were put in place, the CBO projects the government would spend about $170 billion less over a decade, mostly because it would spend less on Medicaid and on tax subsidies aimed at helping people cover the cost of their premiums.

The Republican bill is a political marker, but it has no chance of becoming law so long as Democrats control the Senate and President Obama remains in the White House.

The individual mandate is a key piece of the Affordable Care Act. Without it, individuals would only have incentive to buy insurance after they're sick. And because the law bars companies from excluding people with such "preexisting conditions," the individual insurance market would likely be filled with expensive customers and lack healthy ones—making the exchanges somewhere between unfriendly and unsustainable for private insurers.

The GOP proposal has also pushed back substantive negotiations on the permanent doc fix. Policymakers on both sides of the aisle have been trying to hammer out a deal to repeal and replace what is known as the SGR formula for over a year.

Congress has to find a way to pay the SGR's $138 billion price tag by March 31, or else doctors who provide services to Medicare beneficiaries face an automatic 20 percent pay cut.

Legislators could also pass another temporary doc fix, which they've done each year since 2003 to stop the automatic cuts imposed by the SGR formula. But that Band-Aid solution would anger key stakeholders, who have intensely lobbied the Hill to come up with a real fix.

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