White House Seeks to Weaken Obamacare Individual Mandate, With Executive Order as Backup Plan

White House officials have prepared an executive order that would weaken the Affordable Care Act’s (Obamacare’s) requirement that taxpayers demonstrate proof of insurance, according to people briefed on the matter, suggesting they will issue it if congressional Republicans cannot achieve the same goal through the tax reform process.

President Donald Trump supports abolishing the insurance requirement, called the individual mandate, but he cannot eliminate it unilaterally because it is enshrined in law. Given that several Republican bills aimed at unraveling the ACA have failed, Pres. Trump and his deputies are now seeking other ways to scale back the requirement for health-care coverage.

The draft order would broaden the “hardship exemption” that the Obama administration established for those who face extraordinary circumstances, according to people familiar with the matter. These people asked for anonymity because the order has not been issued yet, and they cautioned that the White House is continuing to press congressional leaders to change the requirement through legislation.

The Treasury Department, which enforces the mandate, has traditionally granted this exemption in cases such as the death of a family member, bankruptcy, a natural disaster or when a taxpayer cannot afford to pay his or her utilities.

The Washington Examiner first reported on the draft executive order Monday morning.

Eliminating the individual mandate outright would spark a political firestorm among Democrats as well as some centrist Republicans, because it is seen as a powerful incentive to encourage healthier consumers to sign up for health insurance.

The current penalty for not having coverage is $695 per adult and $347.50 per child – up to $2,085 per family – or 2.5 percent of family income, whichever is greater. Roughly 6.5 million taxpayers paid a fine for being uninsured in 2015, according to the Internal Revenue Service, though the fine that year was $470 per adult.

The Congressional Budget Office projected in a December 2016 report that abolishing the individual mandate could leave an additional 15 million Americans uninsured by 2026, while saving the federal government $416 billion in subsidies to ACA consumers and Medicaid payments.

Last month, the White House signaled that it would look more favorably upon a bipartisan health bill in the Senate if the measure retroactively eliminated the individual mandate, as well as a requirement that employers with at least 50 employees provide coverage, for this year.

Sen. Susan Collins, R-Maine, who is seen as a key swing vote on taxes, warned Friday against including a repeal of the individual mandate in a sweeping reform bill.

“While I support replacing the individual mandate with an auto enrollment system that allows for a consumer to opt out, it would make it more difficult to pass a tax relief bill if it is combined with a repeal of the individual mandate,” Collins said in a statement.

But House Republicans are considering putting a repeal of the individual mandate into their tax reform proposal, and Sen. Tom Cotton, R-Ark., has lobbied for the provision in the Senate bill.

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Sean Sullivan contributed to this report.