The Corner

Politics & Policy

Senator Cotton’s Tax/Health Idea

The senator from Arkansas has suggested that the tax-reform bill should abolish the IRS-enforced penalty on people who go without health insurance. The Congressional Budget Office has estimated that this step would save the federal government $300 billion over ten years, since fewer people would be purchasing subsidized insurance. President Trump has endorsed the idea.

Three major criticisms of Cotton’s idea could be made. First, the CBO also estimates that ending the fines will cause 15 million or so people to go without insurance. Democrats would say the Republicans were “taking away” insurance from all these people, and Republicans have not been adept at responding to this criticism. Second, the CBO suggests that premiums would increase by 20 percent as these people, mostly healthy, left the market. Third, the savings are inflated—because the CBO estimates underlying the first and second points also are.

I think CBO has vastly overestimated the power of the fines and that criticism three is most likely to be correct. Getting rid of the fines would then be a kind of gimmick that understates the negative impact of a Republican tax bill on the federal debt. But it may be a tempting gimmick.

Ramesh Ponnuru is a senior editor for National Review, a columnist for Bloomberg Opinion, a visiting fellow at the American Enterprise Institute, and a senior fellow at the National Review Institute.


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