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CBO said delaying individual mandate would cut deficit by $35 billion over a decade

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Opinion,Philip Klein,Obamacare,Mitch McConnell,CBO,Unemployment

Senate Minority Leader Mitch McConnell on Tuesday proposed delaying the requirement that individuals obtain government-approved health insurance or pay a tax in exchange for extending unemployment benefits.

Last September, the Congressional Budget Office estimated that delaying the individual mandate would reduce deficits by $20.6 billion in fiscal year 2014 and a total of $35.4 billion over the next decade.

This would reduce government spending, CBO anticipated, because fewer Americans would receive subsidized health care.

If the mandate were delayed, 5 million fewer people would sign up for Medicaid in 2014, 4 million fewer Americans would obtain insurance through their employers and 2 million fewer individuals would buy private insurance.

In addition to reduced spending, the reduction in those accepting employer-based health coverage would mean that more of their income would be open to federal taxation, thus boosting revenues, CBO estimated.

The legislation CBO evaluated in September also delayed the scheduled ramp up in the individual mandate penalty, which starts at $95 (or 1 percent of taxable income) and rises to $695 (or 2.5 percent of taxable income).

Thus, the CBO also found a delay would reduce the number of Americans with subsidized insurance beyond 2014.

Though this provides a broad sense of how the CBO views the financial impact of a delay in the individual mandate, it's important to keep in mind several factors for why the estimate might be different if the individual mandate were delayed now.

To start, fiscal year 2014 began on Oct. 1, and so the federal government is already more than three months into 2014.

Also, the health exchanges have been open for months and people have been signing up for insurance under the assumption that the mandate would be going into effect.

In addition, now that CBO has a better sense of what enrollment in the exchanges may look like for the year, it might alter their cost estimate assumptions.

Separately, the CBO has estimated that extending unemployment insurance would cost $6.4 billion if done for three months and $26 billion if extended for the full year.

On Tuesday morning, the Democratic-controlled U.S. Senate voted to advance a bill that would offer a three month extension and rejected McConnell's individual mandate proposal.

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