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Republicans Have Decided to Attack Obamacare to Pay for Their Tax Cuts

WASHINGTON, DC - OCTOBER 24:  Sen. Rand Paul (R-KY) gestures toward reporters following the weekly Republican policy luncheon at the U.S. Capitol October 24, 2017 in Washington, DC. Pau and Republican senators were joined this week by President Donald Trump.  (Photo by Chip Somodevilla/Getty Images)
Hey, why the hell not, right?
Chip Somodevilla/Getty Images

Introducing the politics of Obamacare repeal into the tax reform conversation seems like a very easy way for Republicans to once again sabotage their policy agenda. It looks like they’re doing it anyway.

Faced with difficult budget math that could force them to scale back their tax ambitions, GOP senators have decided to fund some of their proposed tax cuts by repealing Obamacare’s individual mandate. Killing the rule, which requires Americans to purchase health insurance or pay a tax penalty, could save the government $338 billion over a decade, according to the Congressional Budget Office—essentially by dissuading people from signing up for Medicaid or buying federally subsidized coverage on the Affordable Care Act’s exchanges.

Several high-profile Republicans—including Sens. Tom Cotton, Ron Johnson, and Ted Cruz—have have been pushing this idea for weeks, and they’ve won support from President Trump, who tweeted enthusiastically about it on Monday.

The political logic is straightforward. Under the budget they passed, Republicans are only allowed to add $1.5 trillion to the deficit with their tax cuts. This is currently forcing them to make politically awkward choices, like raising taxes on some middle-income families in order to slash rates deeply on corporations. Meanwhile, the mandate is the least popular part of Obamacare, which Republicans have vowed to dismantle anyway, and the White House has suggested that it might just stop enforcing the thing if Congress doesn’t act. Why not sack it and get more money to play with on taxes?

Of course, there are many reasons why someone might object to this idea on policy grounds. For one, killing the mandate would leave 13 million fewer Americans with health coverage, according to the CBO, which is why it saves the government money. (To be fair, the office is also in the process of rethinking how it models the mandate’s effects on coverage, but these are the numbers we have for now). Some of those uninsured will be young, healthy people who don’t want to spend money on insurance unless the government forces them to. But others are low-income Americans who don’t realize they qualify for Medicaid or Obamacare’s premium subsidies and won’t bother to find out without the mandate nudging them to go get covered. The CBO thinks Medicaid’s rolls will drop by about 5 million.

Beyond that, ending the mandate will mean higher insurance prices for people who still buy on the individual market. The entire point of the rule is to bring down the average cost of coverage by forcing more young, profitable customers into the market. It’s unclear how effectively it has accomplished that goal, which may be one reason why the CBO thinks most local insurance markets will survive without it. But the office still thinks that eliminating the mandate will lead to a 10 percent average bump in premiums. Many Americans would end up paying more for their insurance so that Republicans could lavish their tax cuts on Walmart and the Koch brothers. And some, the CBO believes, will be priced out of coverage entirely.

These consequences may not mean much to most Republicans, who showed a stunning lack of concern about actual health care policy outcomes during their attempt to repeal Obamacare. Others do seem to be a bit concerned: South Dakota Sen. John Thune reportedly said that the deal to kill the mandate also involves passing the bipartisan Obamacare stabilization bill, Alexander-Murray. (Details of this are still sketchy).

But the one thing the GOP does overwhelmingly care about is passing its tax bill, which they view as a last-ditch effort to head off a donor revolt going into 2018. And tying tax cuts to anything that smells like Obamacare repeal seems like it will make that harder.

The Republican tax plan is not overwhelmingly popular with voters. But the bill hasn’t roused the same sort of impassioned opposition as Obamacare repeal did. The mandate itself may be unpopular. But by targeting what many still consider a key part of Obamacare, Republicans risk rousing all of the same, very pissed-off forces that arrayed against their several attempts to repeal the law earlier this year.

And yet, Republicans appear to have stared into this empty power outlet, thought hard, and decided to stick a fork in it. Let’s see where this idea gets them.

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