CEO Statement on Tax Bill That Cuts ACA Individual Mandate Penalties

Wednesday, December 20, 2017

Congress just sent the President a tax bill that is going to have a devastating impact on the nation’s health care system. In fact, it signals the beginning of the end of the individual exchange market created by the Affordable Care Act (ACA).

Once signed into law, the measure will repeal the penalties associated with the ACA’s exchange. Without the penalties, there is no incentive for younger and healthier people to buy into the exchange. The Congressional Budget Office (CBO) estimates 13 million fewer people will be insured in 10 years without the penalties. Without those people in the risk pool, costs will rise for everyone else.

Opponents of the individual mandate have always said they don’t want to be forced to buy something. But the people who only have access to insurance on the Covered California exchange will now be forced to pay health care costs for those who gamble or choose a free-ride. Is that fair or decent? There is little doubt that most will need medical care at some point, and if they cannot pay the bill, the cost of care will fall to the safety net providers who care for them.

Without the individual mandate, the CBO estimates premiums will jump 10 percent a year and that will lead even more people to drop out. Other health plans may very well drop out of the market if it doesn't make financial sense for them to remain. This will ultimately destabilize the individual exchange markets, which is the intent of the Trump administration. 

Regardless of GOP efforts to destroy this landmark law, L.A. Care will continue to participate in the Covered California exchange as long as it exists, as it helps us fulfill our mission to elevate health care for the vulnerable and low-income populations of Los Angeles County. As a public entity, we may very well be the last plan standing.

John Baackes
CEO, L.A. Care

About L.A. Care Health Plan

L.A. Care Health Plan is a public entity and community-accountable health plan serving residents of Los Angeles County through a variety of health coverage programs including L.A. Care Covered™,  Medi-CalL.A. Care Cal MediConnect Plan and PASC-SEIU Homecare Workers Health Care Plan. L.A. Care is a leader in developing new programs through innovative partnerships designed to provide health coverage to vulnerable populations and to support the safety net. With more than 2 million members, L.A. Care is the nation’s largest publicly operated health plan.