CBO: Repealing individual mandate will save us $202 billion

http://www.cbo.gov/ftpdocs/113xx/doc11379/Eliminate_Individual_Mandate_06_16.pdf

Repeal of healthcare law's individual mandate highlighted as deficit-cutter

By Julian Pecquet - 12/14/10 12:41 PM ET

While Republicans have been celebrating a federal judge's ruling against the healthcare reform law's individual mandate as a victory for freedom, they can also make the case that the penalty's repeal could help deflate the ballooning deficit.

After receiving several inquiries about the mandate's cost in the wake of Monday's court decision in Virginia, the office of Sen. Tom Coburn (R-Okla.) on Tuesday sent around the Congressional Budget Office's June estimate for repealing the mandate. The bottom line, according to CBO: Doing so would bring in $202 billion from its 2014 start date to 2019.

It would also cause the number of uninsured people to increase by 16 million — to 39 million — over the same time period.

The penalty itself — $695, or 2.5 percent of income, whichever is greater, starting in 2016 — would bring in about $17 billion from 2010-2019, CBO's scoring window. But that would be more than offset by savings from the millions of people who would choose not to take advantage of federal health programs and subsidies.

According to the CBO, repealing the mandate would reduce the number of people on Medicaid and the Children's Health Insurance Program by 6 million to 7 million people; reduce those with individual coverage by 5 million; and reduce those who choose employer-sponsored coverage by 4 million to 5 million people.

The savings to Medicaid would amount to about $113 billion, according to CBO, while the government would save another $39 billion in uncollected subsidies and about $60 billion in increased tax revenues linked to the reduction in employer coverage.

On the flip side, premiums on the individual market would increase by about 15 percent to 20 percent if there's no mandate, according to CBO. That's because most of the people who would decide to stay uninsured are likely to be younger and healthier, leading to an older, sicker risk pool — exactly what the individual mandate seeks to prevent.