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Repeal of health insurance mandate in GOP tax bill could have big effects

One clear effect of the GOP tax bill is the provision that medical groups object to most: the repeal of the individual mandate to buy health insurance.

Both the House and the Senate versions of the bill include a repeal of the mandate, which calls for a tax on people who don’t buy health coverage to help make up the cost of care for the uninsured.

While the mandate is unpopular among voters, it was a must-have for health insurance companies. They demanded such a mandate to even take part in the health insurance exchanges set up by the 2010 Affordable Care Act, and without it, many more can be expected to hike premiums or drop out altogether from the Obamacare markets, experts predict.

“If the requirement to carry adequate health insurance disappears, so will the health care coverage of many Americans,” American Heart Association CEO Nancy Brown said in a statement.

Related: GOP plans to repeal Obamacare mandate

“As insurance rolls decrease, premiums will rise an average of 10 percent," Brown said. "Paying more for health insurance will be a heavy weight to carry if you have a pre-existing condition like heart disease or stroke. We fervently believe this provision should be rejected and removed from the final legislation.”

The Congressional Budget Office (CBO) estimated that repealing the mandate would result in 13 million fewer people being covered by health insurance and would cause insurance companies to raise premiums by 10 percent a year.

“The repeal of the individual insurance mandate destabilizes an essential pillar of the ACA by removing incentives for young and healthy people to purchase insurance,” a coalition of health and consumer groups, including the American Diabetes Association, the American Cancer Society Cancer Action Network and the American Lung Association, said in a joint statement.

Related: House tax bill would kill medical deductions

“Having young and healthy people as part of the insurance pool helps keep premiums manageable for everyone,” the coalition said.

Ceci Connolly, president and CEO of the Alliance of Community Health Plans, agreed.

"We have concerns the Senate bill disrupts the health care market rather than stabilizes it. Eliminating the individual mandate without any alternative incentives for participation raises the prospect of a weaker, more expensive risk pool," she said.

There are also fears the tax bill could force cuts to Medicare, the extremely popular federal health insurance plan for people over 65.

The Joint Committee on Taxation, which analyzes budget effects for Congress, projected the tax bill would add $1 trillion to the federal deficit over the next decade even if the economy improves.

Under what’s known as a "pay-as-you-go," or "pay-go," budgetary rule, that should trigger automatic cuts to entitlement programs like Medicare and Social Security, although Senate Majority Leader Mitch McConnell, R-Ky., won the vote of Sen. Susan Collins, R-Maine, with a promise that it won’t happen.

"I also got an ironclad commitment that we're not going to see cuts in the Medicare program as a result of this bill,” Collins told NBC's "Meet the Press" on Sunday.

That may not be an easy promise to fulfill, said Elizabeth Carpenter, a senior vice president at Avalere Health. “It will be interesting to see how leadership puts all the pieces together,” Carpenter said.

There are some areas the House and Senate will have to work out. One is the deduction for excessive medical bills.

People who itemize taxes now can deduct catastrophic medical bills from their tax burden. The House bill eliminates the deduction, but the Senate bill broadens it for 2017 and 2018. The two bodies will have to work out a deal on that.

The House bill also would tax graduate students for any tuition breaks they get. That would hit science and medical education especially hard.

Related: Ad encourages Collins to vote against tax bill

The Senate bill doesn’t interfere with that deduction — another area for the two chambers to negotiate.

The bills also differ on how much of a tax break pharmaceutical companies get for developing so-called orphan drugs: drugs that won’t help very many people, and thus wouldn’t be terribly profitable for drugmakers.

The legislation, if it gets worked out, would be the first overhaul of the U.S. tax code in 31 years. It would slash the corporate tax rate, change tax levels for families and individuals, and do away with some deductions in the name of simplifying the federal tax code.

The Senate and House versions must now be reconciled into one bill for the president to sign.