The Republican 'Obamacare' Still Tries to Make People Buy Insurance

The GOP's new proposal does away with the unpopular individual mandate, but if consumers choose to go without coverage, they may later be denied by insurers entirely.

The individual mandate has been the most-hated aspect of the Obamacare law, both among conservatives and the general public, since its inception. For a while, it was so unpopular that GOP candidates had to be sure to disavow it every time they mentioned it. “I always worked very hard against the unconstitutional individual mandate in healthcare. I didn't praise it,” Michele Bachmann said in 2011.

And why should it be praised? It’s not sexy, like the ACA’s free birth-control provision, nor does it make anything cheaper in an obvious way, like the subsidies do. The mandate is only there as a bit of actuarial architecture: If everyone has to sign up for health insurance, healthy people will cancel out the sick ones in the insurance market and premiums should stay relatively stable. The mandate is not cool; it is the nerd at the pool party who just wants to make sure nobody breaks anything.

Earlier this week, a trio of Republican senators, Richard Burr of North Carolina, Orrin Hatch of Utah, and Tom Coburn of Oklahoma, unveiled what seems like a hefty counter-proposal to Obamacare. This measure, they hope, will put the “replace” in “repeal and replace”—the Republican mantra on Obamacare ever since it became law.

The GOP’s “Patient Choice, Affordability, Responsibility and Empowerment Act, or CARE” seems like a more timid and more market-oriented Obamacare, creating some reforms but stopping short of a total overhaul. “It checks a lot of the same boxes as the ACA, but doesn't go as far,” Larry Levitt, a senior vice president at the Kaiser Family Foundation, said.

It would keep in place the subsidies that help low-income people pay for health insurance premiums, but it would only offer them to people making up to three times the federal poverty level, or $34,470, a lower limit than under the ACA.

It would also end a thing called the "employer health insurance tax exclusion," which just means that workers who get insurance through work don’t pay taxes on the cost of those plans. The GOP plan would cap the benefits that aren’t taxed at 65 percent of the total amount, so workers would pay taxes on the other 35 percent. Economists love this idea, as Sarah Kliff points out, because the current system makes insurance more expensive for individuals than for companies, and it encourages businesses to sign up for costly, generous health plans. But under the GOP plan, for the 48 percent of people who get insurance through their employers, health insurance would likely get skimpier and more expensive.

And perhaps unsurprisingly, the GOP version does away with mandates of any kind (“provide needed relief from job-crushing mandates,” they write.) It would repeal both the requirement that individuals buy insurance and that companies with more than 50 workers offer insurance.

But here’s the interesting part: The proposal does away with a mandate in name only. People would still be forced to stay continuously covered—if they want a guarantee of ever getting insurance again, that is.

That’s because just like under the ACA, the GOP plan would prevent insurers from excluding people based on pre-existing conditions or charging them more, but only if the applicant has been insured for “a period of at least 18 months.” So, sure, go without insurance. But when you’re ready to have a baby, or if you get cancer, insurance companies could deny you because you’ve been living coverage-free.

“You can't wait to sign up just because you're healthy, because you won't be able to buy insurance when you're sick,” Levitt told me. “In some ways, I think it's more onerous than the individual mandate. With the ACA, you just pay a penalty that year [for being uninsured]. With this, if you drop out of the market, you may be excluded from coverage down the line.”

People might be more amenable to this setup, though, than they are to Obamacare's tax penalty. Unlike under Obamacare, there would be no penalty for people who go without health insurance by choice—as long as they stick with that choice forever. But since few people are likely to want to make that bargain with their brittle, 62-year-old future selves, getting coverage and keeping it going would likely be a popular option, just like it has been under Obamacare.

So what does the GOP proposal tell us about mandates? Whether you go about it the Obamacare way, or the GOP “CARE” way, there has to be some strategy for getting people to sign up for health insurance before they get sick.