On Wednesday, the Congressional Budget Office released its long-awaited review of the American Health Care Act, the Obamacare quasi-replacement passed several weeks ago and celebrated with a ceremony on the White House lawn. There were several key findings, most of them negative for the bill. There were also several major errors in the production of the report which will be ignored by the mainstream media.
Here’s what you need to know.
1. The Number Of Insured Would Drop By 23 Million. First off, it’s important to know that the CBO is measuring its estimated number of insured against the flawed March 2016 estimates; as Phil Kerpen points out, the CBO itself “acknowledged” that they were off by 5 million people in that estimate.
Got that? CBO officially assumes exchange enrollment in 2017 is 15M when it’s actually 10M and in 2018 they assume 18M when they expect 11M.
— Phil Kerpen (@kerpen) May 24, 2017
And don’t forget that as recently as 2014 CBO was projecting exchange enrollment of 25M in 2017.
— Phil Kerpen (@kerpen) May 24, 2017
It’s also worthwhile noting here that the number of uninsured would grow because most people would stop buying insurance without the threat of government fine; the study also considers those who buy certain types of catastrophic insurance “uninsured.” Still, the CBO estimates that by 2026, “an estimated 51 million people under age 65 would be uninsured.”
2. The AHCA Would Lower The Deficit. According to the CBO:
[O]ver the 2017-2026 period, enacting H.R. 1628 would reduce direct spending by $1,111 billion and reduce revenues by $992 billion, for a net reduction of $119 billion in the deficit over that period. The provisions dealing with health insurance coverage would reduce the deficit, on net, by $783 billion; the noncoverage provisions would increase the deficit by $664 billion, mostly by reducing revenues.
In short, the government would spend less money on Medicaid grants, but the spending to reduce premiums would count against those savings, as well as loss of revenue from fines (good) and repeal of taxes (also good).
Here’s their summary in a chart:
3. Those With Pre-Existing Conditions In The Individual Insurance Market Would Be In Trouble In Certain Areas. Because Obamacare essentially forced everyone into pooled insurance, that supposedly took care of the problems associated with pre-existing conditions. The AHCA ditches those changes. Thus the CBO states:
The market for insurance purchased individually with premiums not based on one’s health status — that is, nongroup coverage without medical underwriting — would be unstable if, for example, the people who wanted to buy coverage at any offered price would have average health care expenditures so high that offering the insurance would be unprofitable. …the agencies estimate that about one-sixth of the population resides in areas in which the nongroup market would start to become unstable beginning in 2020. That instability would result from market responses to decisions by some states to waive two provisions of federal law, as would be permitted under H.R. 1628.
This is undoubtedly the point the Left will focus in on.
4. Costs Will Decline For The Young, Rise For The Old. Because the AHCA relieves the cap on cost proportionality for insurance for older Americans, premiums would likely rise — but that increase would be offset on average by lower prices for young Americans. Thus, the CBO finds that in states that do not request waivers, “average premiums in the nongroup market would be about 4 percent lower in 2026.”
In areas where some waivers — but not all — are attained, the costs would decline by approximately 20 percent, thanks largely to the offering of non-comprehensive insurance.
Finally, states that issue waivers involving essential health benefits and community rating would also drop the average rates charged — but, of course, those with pre-existing conditions would pay more. The CBO states:
Over time, it would become more difficult for less healthy people (including people with preexisting medical conditions) in those states to purchase insurance because their premiums would continue to increase rapidly. As a result of the narrower scope of covered benefits and the difficulty less healthy people would face purchasing insurance, average premiums for people who did purchase insurance would generally be lower than in other states — but the variation around that average would be very large.
These are the people the Democrats will focus on: those who have to pay more for maternity care, mental health and substance abuse benefits, and pediatric dental benefits, for example. The CBO also says out-of-pocket costs could increase dramatically when bars to lifetime coverage caps are lifted.
Here’s the bottom line: the bill is revenue neutral, so it can be passed through reconciliation. It gives both sides their talking points: Speaker of the House Paul Ryan (R-WI) is already touting the statement that premiums could drop and that it will save the government money; Democrats are already touting the drop in number covered as well as the possible effects on the elderly and those with pre-existing conditions. Not much has changed here. But both sides will now retrench politically as the Senate considers moving forward.
