Frederica Freyberg:

Following passage of the Republican tax cut bill late this week in the U.S. House, the U.S. Senate now takes up its version. For his part, Wisconsin Republican Senator Ron Johnson said he cannot support the measure saying, “We have an opportunity to enact paradigm-shifting tax reform that makes American businesses globally competitive. In doing so, it is important to maintain the domestic competitive position and balance between large publicly-traded C corporations and pass-through entities. These businesses truly are the engines of innovation and job creation throughout our economy and they should not be left behind. Unfortunately, neither the House nor Senate bill provide fair treatment. So I do not support either in their current versions.” Now, Senate leaders can afford only two Republican defections to win passage. The Senate bill, which is expected to go to a vote as soon as the week after Thanksgiving also includes a repeal of the Affordable Care Act’s individual mandate, something the House bill does not include. The individual mandate requires people carry health insurance and exacts a penalty for people who do not. That penalty is $695 for an adult. What happens if this mandate goes away? We asked the health policy director at the UW Population Health Institute Donna Friedsam. And thanks very much for being here.

Donna Friedsam:

Happy to be here.

Frederica Freyberg:

So to that question, what does happen if this individual mandate is eliminated?

Donna Friedsam:

The people that are looking to eliminate the mandate consider it a tax on people who are being required to purchase a product they may not want to purchase. And suggest that people are having to pay for something they don’t want and perhaps something that is not up to what they’re interested in buying. But if the mandate goes away, there’s a number of unintended consequences we may see happen. Number one, the people who are healthy and younger who won’t — will no longer be compelled to purchase insurance, will likely not purchase insurance. And when that happens, the people that remain in the market will be the older people or people who have more health needs and that means the insurance premiums will increase for those people. And overall insurance premiums are expected to increase 10%. That’s according to the GAO or more likely more other people suggest.

Frederica Freyberg:

Now, I've read that this individual mandate was not as effective as planned. How true is that?

Donna Friedsam:

The individual mandate is considered to be a very important part of the Affordable Care Act in terms of bringing people to purchase their insurance coverage and has been important in getting people to consider their insurance options. Now, many people have indeed looked at the penalty and considered whether the penalty is something they want to take instead of purchasing insurance, particularly younger, healthier people. And there have been a number of exceptions in the — to the mandate that allow people to opt out of purchasing insurance. But overall the carriers in the market consider the individual mandate to be one of the key components to allowing them to offer coverage in the Affordable Care Act.

Frederica Freyberg:

What's the interplay between the individual mandate and pre-existing conditions?

Donna Friedsam:

So the Affordable Care Act or otherwise known as Obamacare requires insurance companies to provide insurance to all people regardless of their pre-existing conditions or their health status. So the only way they can do that at an affordable price is to make sure that they have enough healthy people also enrolling in coverage so that everyone shares the risk and thus the costs are shared across a broad risk pool or broad population of enrolled people. If people who are young and healthy think they don’t need to participate in insurance, the only people that will enroll in insurance are people who currently have health needs or have high health risks. And then the insurance companies will price their products to reflect that high need, and the premiums will become very expensive and in all likelihood unaffordable for many people.

Frederica Freyberg:

Now, you addressed this a little bit earlier, but I've read that the projection is that 13 million people would end up not being covered if this mandate goes away. And I just wonder whether this number represents people who never wanted coverage in the first place or is it because without the mandate, coverage just becomes too expensive?

Donna Friedsam:

The Republicans who are advocating for this change in the tax bill are suggesting that the 13 million people might be people who are simply opting out of insurance and not buying a product that they don’t want. It seems that some people will indeed be opting out for those reasons, but many people will be not purchasing coverage because they’re going to find it unaffordable, further unaffordable. Not to say people aren’t finding it unaffordable today. That’s another challenge we have to address. But people will find it more unaffordable as the premiums increase with this change. And as well without the mandate, people will no longer be compelled to even look for coverage. And currently many of the people that go look for coverage go not knowing what kinds of federal subsidies are available. And the savings that are contemplated in the tax bill are there because they’re expecting that all the people that are currently getting federal subsidies will no longer be taking those subsidies because they won’t be going to look for their coverage and claiming the federal subsidies that are available.

Frederica Freyberg:

Now, my understanding is about 243,000 people in Wisconsin are on Obamacare plans right now. How might this repeal or elimination of the individual mandate affect Wisconsin?

Donna Friedsam:

So we’re currently in an open enrollment period right now in Obamacare. So it started on November 1. And it goes through December 15. And those are for plans that start on January 1. And people should know no matter what’s happening in Congress right now open enrollment for 2018 is in existence and they need to go and look for coverage. But indeed if the individual mandate goes away, then the premiums going forward will increase and in all likelihood, people will find it more difficult to afford coverage, particularly people who don’t have access to the federal premiums that are available. That being said, the majority of people who look for coverage through the Affordable Care Act do have access to federal premium subsidies. The concern here again is without the mandate, people will not go look for coverage and will never find out about the subsidies that are available for them.

Frederica Freyberg:

At what point does all this chipping away at the Affordable Care Act law just mean the whole thing collapses?

Donna Friedsam:

Ultimately the more deterrent there is for people to look for coverage and find out what’s available for them. And particularly the more deterrents there are for healthier people to go enroll in coverage, the less of a business incentive there is for insurance companies to participate in the program and to offer products. And that’s when the insurance carriers say, “We can’t offer a product that is going to work for our company and make it financially viable.” And that’s when it does become a question of whether the program can continue. What we need is a stable insurance market where people do have incentives to enroll and make it a financially viable system so that insurance carriers see a business model there that they can continue to offer products.

Frederica Freyberg:

All right. Donna Friedsam, thanks very much.

Donna Friedsam:

Thank you.