On Monday, the Congressional Budget Office released its score for the Senate health care bill that would restructure Medicaid and reform Obamacare while leaving most of its major regulations intact.
There are several problems with this approach. The biggest problem is that there are three possible metrics of success for a health care reform plan: (1) higher number of people covered; (2) lower average premiums; (3) lower government expenditure. Thanks to media coverage and Republican cowardice, the first metric has become the most prevalent — and that’s the one that hurts Republicans the most, since even if people opt out voluntarily, they are now “uncovered” by this metric. The second metric, lower average premiums, would be achievable along with lower government expenditures through simple repeal of Obamacare. But Republicans won’t abandon (1) in favor of (2) and (3), and thus they have presented a plan that’s mediocre on all three counts.
Here’s what you need to know.
1. It Will Reduce The Deficit. According to the CBO, the Senate bill would reduce the federal deficit from 2017 to 2026 by $321 billion, $202 billion more than the savings from the House version of the bill. Overall, the bill would reduce spending by $1.022 trillion and thanks to tax cuts, reduce government funding intake by $701 billion. Most of the cuts would come via future reductions in projected spending on Medicaid — cuts that may never materialize given the shifts in Congressional attitudes about spending.
2. It Will Increase The Uninsured. The CBO has always had a rosy view of Obamacare; they suggest that the same number of people who are uninsured now will be uninsured by 2026 under Obamacare. That’s not remotely true. But using that baseline, they say that the Senate bill would increase “the number of people who are uninsured by 22 million in 2026,” leaving some 49 million uninsured. They also say that 15 million more people would be uninsured by 2018 — mainly because people would opt out after not having to pay the Obamacare mandate penalty. Lower Medicaid spending would supposedly also force people off Medicaid, leading to enrollment drops of 16% among people aged 65 by 2026; furthermore, rising deductibles for poorer Americans would cause them not to buy health insurance in the first place.
3. The Markets Would Stabilize. This is the most questionable assertion by the CBO. First, the CBO says that Obamacare itself is stable “in most areas.” That’s highly doubtful, given the death spiral occurring from lack of sign-ups and elevated cost to insurers, who are pulling out of the program. But the CBO says that the system would also be stable under the Republican Senate plan: thanks to subsidies, cost-sharing subsidies (payoffs to insurance companies), and additional federal funding, insurance companies would stay in the markets.
4. Premiums Would Increase, Then Drop. According to the CBO, in 2018 and 2019, premiums would jump. That’s because those years still use the Obamacare benchmark plan of 70% covered benefits on average for subsidies; because there’s no mandate, people would drop out, driving up costs. In 2020, the costs would drop precipitously because the new plans under Trumpcare would have a benchmark coverage of 58%. These plans would have high deductibles but lower premiums. The CBO estimates that low-income people won’t buy any plan rather than the higher-deductible plans. The CBO concludes that “some enrollees could see large increases in out-of-pocket spending because annual or lifetime limits would be allowed.”
So ,here’s the bottom line: Trumpcare reduces future spending on Medicaid; reduces regulations on essential health benefits, caps, and age-to-spending ratios at the state level, but only in 2020; and gets rid of the Obamacare mandate, as well as some taxes. None of this would be bad in and of itself; in fact, most of it would be good. But it won't be, in all likelihood, because Republicans own what Obama created.
If Republicans were willing to argue for free markets,they could have done all of this and more by simply repealing Obamacare wholesale and opening up the individual market. By playing the Democrats’ game — accepting their baseline premise that the government’s job is to provide health insurance — Republicans lose no matter what happens next.