Congressional Budget Office Score Is Bad News For GOP’s American Health Care Act
The Congressional Budget Office delivered some bad news yesterday to House Republicans on their replacement for Obamacare.
Late yesterday, the Congressional Budget Office came out with its score of the House GOP’s replacement for the PPACA, the ‘American Health Care Act,’ and the news is not good for House Republicans or the Administration:
WASHINGTON — The House Republican plan to replace the Affordable Care Act would increase the number of people without health insurance by 24 million by 2026, while slicing $337 billion off federal budget deficits over that time, the nonpartisan Congressional Budget Office said Monday.
Republicans had been bracing for what was almost certain to be a bleak accounting of the legislation’s projected effects. The American Health Care Act, as Republicans call their bill, was already facing widespread criticism from health care providers, some conservatives and a united Democratic Party.
The much-anticipated judgment by Capitol Hill’s official scorekeeper did not back up President Trump’s promise of providing health care for everyone and was likely to fuel the concerns of moderate Republicans. Next year, it said, the number of uninsured Americans would be 14 million higher than expected under current law.
But it also provided talking points for House Republican leaders who need the support of rebellious conservatives to pass the measure: lower deficits, reduced federal spending and tax cuts.
The Trump administration immediately denounced the budget office’s conclusions. Tom Price, the secretary of health and human services, suggested the report offered an incomplete picture because it did not take into account regulatory steps he intends to take, as well as other legislation that Republicans plan as part of their multistep strategy to repeal and replace the health law.
“We disagree strenuously with the report that was put out,” he said at the White House.
Democrats remained steadfast in their opposition. “The C.B.O. score shows just how empty the president’s promises, that everyone will be covered and costs will go down, have been,” said Senator Chuck Schumer of New York, the Democratic leader. “This should be a looming stop sign for the Republicans’ repeal effort.”
The coverage numbers released Monday will make it only more difficult for Republicans to explain why their legislation would improve the country’s health care system. And that could make the bill’s fate in the more narrowly divided Senate much more tenuous.
In a sign of the concern over the coverage projections, Senator Susan Collins, Republican of Maine, said the budget office’s report was “cause for alarm” and “should prompt the House to slow down and reconsider certain provisions of the bill.”
Average premiums for people buying insurance on their own would be 15 to 20 percent higher in 2018 and 2019 than they would be under current law, the budget office said. But after that, premiums would be lower than projected under current law — around 10 percent lower by 2026, the budget office said.
The number of uninsured would shoot up next year by 14 million, the budget office said. Most of the increase in 2018 would result from people choosing not to buy insurance after tax penalties for those without coverage are repealed, but in later years, the office said, the number of uninsured would rise further because of changes in Medicaid, the health program for low-income people.
“Some states would discontinue their expansion of eligibility” for Medicaid, and federal spending per beneficiary would be capped, the report noted.
For people receiving subsidies under the Affordable Care Act, the report said, tax credits proposed by House Republicans “would generally be less generous.” But the market would not collapse. Other changes in the House bill would “lower average premiums enough to attract a sufficient number of relatively healthy people to stabilize the market,” the budget office said.
The budget office estimated that 52 million people would be uninsured in 2026 under the House Republican bill, compared with 28 million projected under current law.
The report foresees huge changes in Medicaid. By 2026, it said, federal Medicaid spending would be 25 percent lower under the House bill than is projected under current law, and the number of Medicaid beneficiaries would be 17 percent lower, with 14 million fewer people covered by Medicaid.
Republican leaders tried to focus on the positive news in the budget office’s analysis.
Speaker Paul D. Ryan said the report showed that the Republican plan would lower premiums.
“I recognize and appreciate concerns about making sure people have access to coverage,” he said. “Under Obamacare, we have seen how government-mandated coverage does not equal access to care, and now the law is collapsing.”
Democrats had criticized Republicans for pushing the bill through two House committees last week before the Congressional Budget Office had weighed in, saying it was irresponsible to begin considering legislation without a firm grip on its potential costs and ramifications.
On Monday, they said they were vindicated.
“Today’s analysis from the C.B.O. confirms that the Republicans’ repeal bill isn’t a health care bill at all,” said Representative John Yarmuth of Kentucky, the ranking Democrat on the House Budget Committee. “It’s an ideological document with real and incredibly damaging consequences for American families.”
But the analysis does show that under the Republican plan there would be winners — and losers. Under current law, in 2026, a single 21-year-old earning $26,500 with an insurance policy that costs $5,100 a year would get a tax credit of $3,400 and would have to pay $1,700 of the premium. Under the Republican bill, that person’s share of the cost would drop to $1,450.
By contrast, a 64-year-old earning the same amount would fare much worse. That person’s $15,300 health plan would be offset by a $13,600 tax credit under current law, leaving the consumer responsible for $1,700. Under the Republican plan, health insurers would be free to charge older people more, raising that person’s premium to $19,500. But the tax credit would be only $4,900, and that person’s share of the premium would then be $14,600.
House Republicans would allow insurers to sell health plans covering a smaller share of consumers’ medical costs, and cost-sharing subsidies for low-income people would be repealed in 2020. As a result, the budget office said, deductibles and other out-of-pocket costs for many consumers would be substantially higher than under the Affordable Care Act.
The budget office produces a variety of budget and economic analyses, including deficit projections, legislative options for lawmakers confronting the nation’s most vexing problems and cost estimates for legislation. Its director, Keith Hall, was appointed in 2015 by congressional Republicans, and it is generally respected for its objective analysis.
But with an unfavorable analysis expected, Republicans from the White House to Capitol Hill began to undermine the credibility of the budget office’s numbers last week and kept it up through the weekend.
“If the C.B.O. was right about Obamacare to begin with, there’d be eight million more people on Obamacare today than there actually are,” President Trump’s budget director, Mick Mulvaney, said Sunday on ABC’s “This Week.” He added, “Sometimes we ask them to do stuff they’re not capable of doing.”
These numbers are not entirely unsurprising, of course. In the days after the AHCA was released to the public, there have been several analyses of the plan published that have projected that it would lead to increases in the number of uninsured and in increases in the premiums that insurance company would charge for individual and other plans in both the short and long term. Some of these reports were slightly more optimistic than the CBO’s score, but all of them were in basic agreement that we’d see an increase in the number of uninsured Americans and that premiums would increase over what they’d be under the PPACA in the short term and decline slightly in the long term, albeit not by a very significant amount. On the premium side, the CBO estimates that premiums would be 15% to 20% higher under the AHCA than they would be under the PPACA over the next two to three years, and roughly 10% lower after ten years under the PPACA. In both cases, though, it’s worth noting that premiums would increase even in the long term and there seems to no prospect that premiums would decrease at any point in time. Additionally, there’s little indication in the CBO report that we’d see a reduction in deductibles in individual plans that have hit many households very hard under the PPACA. If those deductibles remain high, then the alleged savings that individual consumers would receive under the AHCA would not come to fruition at all.
The biggest issue coming out of the CBO score, of course, is the huge increase in the number of uninsured that would result if the AHCA were to pass in its current form. The CBO projects that the number will rise over time to as high as 24 million additional uninsured Americans, meaning that, eventually, the number of people without health insurance in the United States would be higher than it was, or likely would have been, before the adoption of the PPACA. To be fair, not all of this increase in the uninsured is attributed by the CBO to specific provisions of the law that would take coverage away involuntarily, it includes that, of course, but also includes people who would likely be forced to drop or reduce coverage due to affordability issues and those who would voluntarily choose not to get insurance coverage at all. In their immediate response to the CBO report, many Republicans pounced on this as a way of pushing back against the report. It strikes me, though, is that pointing out the different reasons for why people would end up being uninsured misses the point. Whether it’s a voluntary or involuntary decision, the existence of a large number of people without health insurance poses a serious problem for a nation as a whole that threatens to undermine the entire health care industry. While Republicans look at millions of people deciding not to get coverage and think it’s an example of freedom, they ignore the fact that the people who tend to do this are the young and healthy people that are needed to make the risk pool something manageable for insurance companies. Without them selecting the option to be coverage, costs increase for insurance companies, and those costs will inevitably be passed on to consumers.
The one piece of ‘good news’ in the report for Republicans is the fact that the CBO reports that the AHCA would result in deficit reduction of roughly $360 billion over ten years. While this isn’t an insignificant number, it hardly seems like a reason to pass a bill that would have an otherwise negative impact on the economy. For one thing, this deficit reduction is far less than it appears to be when you realize that we’re talking about total reduction over the course of roughly a decade rather than a reduction in a given year. That translates out to about $36 billion dollars in lower deficits per year, which is hardly a drop in the bucket when you consider the fact that we’re talking about a budget of over $4 trillion a year. Additionally, this deficit projection doesn’t factor in the fact that this reduction is likely to be offset by increases in the budget from other sources, or that the reduction could end up being far less if the economy ends up falling into recession sometime in the next ten years. If that happens, then the supposed deficit spending would likely disappear.
Politically, there seems to be no question that this is bad news for the political future of the AHCA and for repeal of the Affordable Care Act at least in the short term. From the moment the CBO report was released, Democrats have been highlighting the increases in the number of uninsured to reinforce their argument that the Republican plan will hurt the middle class, poor, and those who depend on health insurance to pay for necessary care would be harmed by the Republican plan. It’s also likely to serve as fodder for Republicans in the House and Senate who oppose the bill for a wide variety of reasons, some because it goes too far in changing the status quo, and others because it doesn’t go far enough. Perhaps most important for Republicans many of the people that the CBO report projects would be impacted the most negatively by the AHCA come from groups that Donald Trump won in the 2016 General Election, raising the possibility that this voting bloc may decide to change its mind and its vote in upcoming elections. All of this has left Republicans scrambling for a response as they try to clear the way for passage of the bill in the House before it faces the Senate, with the realization, as Megan McArdle notes, that voters are unlikely to ignore this CBO score:
Regardless of what you think of Obamacare, or the new Republican bill, the politics of this are dreadful. Republicans made fun of Democrats for spending a year wrangling over trivia and tossing ideas into the CBO black box to see what kind of numbers it would spit out. They vowed they wouldn’t repeat that mistake. But this is what happens when you don’t repeat that mistake: You get a score that’s going to make your bill darned hard to take to voters.
Oh, sure, they can quibble with the score. I can quibble with the score, as I did with the scores that Obamacare got. The CBO does not retire into its back office with a crystal ball and read off the budget numbers it sees therein; they do the best they can to guess at the future with very limited knowledge and imperfect models. (That is in no way a slam on the CBO; all I’m saying is, economic science has not advanced to the point of perfect forecasting, and probably never will.) We do not rely on CBO scores because they are particularly accurate, but because they are consistent, allowing us to compare bills to each other — and because they provide an exceptionally useful check on the wildly overoptimistic estimates that politicians would produce on their own.
You know what voters are not interested in? Abstract technical arguments about forecasting assumptions. As someone who enjoys nothing than a lively conversation about such abstruse topics, you will have to trust me when I say that the ordinary voter’s eyes glaze over and they rapidly start remembering very important appointments all the way across town. Oh, sure, a few thousand people on internet message boards will become very passionate on the subject. The average voter is going to remember whatever numbers were in the headlines, or scrolling by on the nightly news.
Thus, for want of a crystal ball in anyone’s hands, the CBO score is going to provide the canonical numbers in discussing this bill, no matter how hard Republicans complain about their assumptions. And that number is going to make it difficult — I don’t say impossible, but surely very difficult — to get this thing passed.
Even before the CBO report was released yesterday afternoon, Republicans were attempting to undermine by arguing that the CBO was wildly inaccurate when it came to the scores it ultimately released for the final version of the PPACA back in 2009 and 2010. Along with picking out the numbers that they like from this report, such as the news about deficit reduction, Republicans are continuing that line of attack. First of all, as McArdle notes, this is not likely to be a persuasive argument for anyone other than those people on the right already inclined to support the plan. The average American is going to see the reports about 24 million people losing insurance and not pay attention to much else, especially since the one positive number for the GOP regarding deficit reduction is actually fairly meaningless in the long term. Second, as Alice Ollstein notes, this assertion by the GOP is simply untrue. In fact, the CBO’s final scores of the PPACA have turned out to be fairly accurate over time. Attacking a bad CBO report is, of course, a bipartisan tradition, of course, but lying about what the CBO actually said is quite another thing and the GOP does itself no favors when it does so.
In the end, of course, the question is what all this means for passage of the AHCA in its present form. It’s hardly good news, of course, since it’s likely to provide further ammunition to opponents on both the left and the right, both of whom have spent the last week working to undermine the plan in both the House and the Senate. In the end, of course, it’s likely that GOP leadership will be successful to ramming some version of the bill through the House thanks to the size of their majority. The Senate is a much different story, though, and it seems clear that this report is likely to make the path far rougher than it was already likely to be. If the AHCA is going to pass, it’s likely only to happen if and when significant changes are made to the bill itself. In its present form, I suspect the AHCA is DOA.
Here’s a copy of the CBO report: