Republican Bill Would Suspend Obamacare Mandate Amid Premium Hikes

Penalty would not apply if premiums have risen 10 percent or more on average

Healthcare.gov

Healthcare.gov / AP

BY:

The Obamacare Tax Relief and Consumer Choice Act, introduced last month by Republican senators, would suspend Obamacare’s individual mandate when health insurance premiums rise.

Sens. Tom Cotton (R., Ark.), Kelly Ayotte (R., N.H.), John McCain (R., Ariz.), James Lankford (R., Okla.), Ron Johnson (R., Wis.), and Richard Burr (R., N.C.) introduced the bill at a time when major insurers such as Aetna and UnitedHealth have announced they will cut participation in the Obamacare exchanges. Insurers participating in Obamacare are requesting an average national rate increase of 23.9 percent.

Obamacare’s individual mandate requires individuals to buy health insurance or pay a penalty to the IRS. In 2016, uninsured individuals must pay either 2.5 percent of their family income or a flat fee of $695 per adult and $347.50 per child, whichever is greater.

The bill would suspend this penalty under two circumstances. The mandate would no longer apply to residents in states where health insurance premiums have increased by 10 percent or more on average. The mandate also would not apply to individuals who cannot afford the deductible of available health care plays, under Obamacare’s current definition of affordability.

"Because these deductibles are so high, especially the bronze plans, this would essentially exempt everyone making less than close to $100,000 dollars regardless of whether premiums went up in your state or not, the deductible would be a huge exemption from the mandate," said a Senate aide who is familiar with the bill.

The bill would also remove Obamacare restrictions on health savings accounts, removing Obamacare’s 20 percent tax on the accounts and allowing them to be used to cover over-the counter drug and medical costs.

"Obamacare stripped away a valuable tool that patients all across our country came to depend on—health savings accounts and flexible spending accounts," Lankford said in a press release. "These valuable tools are used by people all across our nation to help with the cost of high deductibles, co-pays and other out-of-pocket medical expenses using tax-free dollars. This bill repeals these harmful Obamacare provisions, and restores the full ability for Americans to utilize these valuable savings and spending health care accounts."

Americans have fewer health insurance choices now that some insurers have announced they are exiting Obamacare. When Aetna exits the exchanges next year, residents of Pinal County, Arizona will be left without a single insurer offering coverage.

The bill would help uninsured residents of this county, who would otherwise be forced to pay the Obamacare penalty.

"Just last week, Aetna became the latest major health insurer to exit the marketplace, which makes Pinal County, Arizona the first in the country to have zero options when it comes to Obamacare’s marketplace," said McCain, who represents the state. "Our legislation would provide relief to Arizonans and Americans across the country who have been hit the hardest by out-of-control health care costs under Obamacare."

"Arizonans shouldn't be forced by the government to pay potentially thousands of dollars for something the Obama administration and congressional Democrats have made increasingly unaffordable," McCain said.

"From the start, Obamacare has been the wrong solution to fixing our nation’s health care system, and has left our citizens with less freedom, reduced access, and decreased quality of care," McCain said. "Now we are seeing the consequences: premiums are skyrocketing, insurance companies are facing massive losses, co-ops are going under leaving thousands of Arizonans out-to-dry, and citizens are facing higher health care costs for decreased quality of care and fewer choices."

The bill will be voted on this fall, according to the Senate aide.

Ali Meyer

Ali Meyer   Email Ali | Full Bio | RSS
Ali Meyer is a staff writer with the Washington Free Beacon covering economic issues that expose government waste, fraud, and abuse. Prior to the Free Beacon, she was a multimedia reporter with CNSNews.com where her work appeared on outlets such as Drudge Report and Fox News. She also interned with the Heritage Foundation and Pacific Research Institute. Her Twitter handle is @DJAliMeyer, and her email address is meyer@freebeacon.com.

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