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May 25 2017

Many of the people who will 'lose coverage' under Obamacare repeal will choose to do so

via Washington Examiner
by Hadley Heath

The Congressional Budget Office has released an analysis of the American Health Care Act, the House-passed legislation to repeal and replace Obamacare. The CBO says the bill would reduce the federal deficit by $119 billion, result in 23 million fewer Americans being insured, and lower insurance premiums in the next 10 years.

The Left have already predictably seized on the coverage effect: 23 million fewer Americans insured than projected under current law. This figure from the CBO is no surprise, but it needs some context.

The CBO predicts 14 million fewer insured through Medicaid, 6 million fewer insured in individually-purchased plans, and 3 million fewer insured through employer-based plans.

Like all budget projections, the CBO isn't just considering changes from today, but changes from what they believe will happen in the future. Therefore, the projected decrease in Medicaid coverage includes not only people who are currently in the program, but is based on the assumption that, if Obamacare remained law, more states would expand the program. Today, 31 states have expanded Medicaid; 19 states have not.

It's worth remembering that the CBO can be wrong: The agency was about 12 million off on its projection of how many people would enroll in Obamacare's exchanges.

The CBO is likely right that fewer people will have insurance coverage under any Republican plan that repeals Obamacare. After all, while the projection about individual policies attempts to take several variables into account, much of the change due to repeal would be people choosing to go uninsured in the absence of Obamacare's penalty. Lawmakers should keep in mind that the number of people with coverage, while an important metric, isn't necessarily the right one to gauge the success of any health reform law.

For projections related to premiums, the CBO divided states into three categories: 1) states that would not seek waivers for major regulations on what insurance policies must cover or how they may be priced to different consumers based on health status, 2) states that would waive some of the regulations for what plans cover, and 3) states that would waive both the regulations on benefits and health- or risk-based pricing.

The CBO says that premiums would be 4 percent lower in the first group and 20 percent lower in the second group. For the third group, they predict that "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."

Wednesday's score was released just hours after a new study from the Department of Health and Human Services showed that Obamacare resulted in an average premium increase of 105 percent since 2013.

Obamacare has failed to control costs. It certainly failed to deliver on the repeated promise of lowering the average family premium by $2,500. And while the list of covered services in plans today might be longer than before, we should recognize that not everyone wants or needs such robust (and costly) coverage.

The majority of Healthcare.gov states (62 percent) saw average premium increases between 2013 and 2017 of more than 100 percent, meaning average premiums in most states have more than doubled. In two states (Alabama and Alaska), the average premium increase is more than 200 percent, meaning rates more than tripled.

What did the CBO say would happen to premiums in 2009, when the agency was projecting the effect of Obamacare? Well, they got the direction right: They said average premiums would be 10 to 13 percent higher in 2016. Even this projection, though, failed to accurately predict that average premiums would in fact double.

Considering all this, it's no wonder that Obamacare has been so politically divisive. Some families credit the law with helping them, but others are paying premiums as high or higher than their mortgage payments. It's a deeply personal issue for people.

But the CBO score is just that: a score, a projection, a best guess from mathematicians who are working under a certain set of assumptions. It's an important part of the debate, but given the complexity of health insurance markets, may fail to accurately predict what changes lie ahead.

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