The Congressional Budget Office on Monday released its long-awaited analysis of the Republican plan to replace Obamacare — and it contains some very bad news for supporters of the American Health Care Act.
CBO projects that the Republican plan would cause 24 million Americans to lose coverage by 2026. This is a much bigger drop in coverage than experts had expected. Republican legislators will now be forced to answer questions about why tens of millions of Americans will lose coverage and how those people will fare under the new system.
The CBO projections also show that a promise President Trump and his advisers have made multiple times — that Trump would draft a bill that covered everyone, or that no one would lose coverage under his plan — to be flatly false.
Just this weekend, Health and Human Services Secretary Tom Price said, “We don’t believe that individuals will lose coverage at all.” CBO says this is not the case whatsoever.
The Republican bill offers less help to people who buy their own insurance than Obamacare currently does. It also hugely pares back the Medicaid expansion, which covers millions of low-income Americans.
The CBO report lays bare that, taken together, those changes mean million fewer Americans would have coverage.
The CBO report, explained
The Congressional Budget Office report on AHCA runs five pages, and you can read it here. Here are the key points it makes:
- CBO estimates 14 million would lose coverage in 2018, mostly people in the individual market. This report projects that much of the early coverage loss would stem from repealing Obamacare’s mandate that all Americans purchase coverage or pay a fine. “Some of those people would choose not to have insurance because they chose to be covered by insurance under current law only to avoid paying the penalties, and some people would forgo insurance in response to higher premiums,” the report concludes.
- After that, increases in the uninsured would be from Medicaid cuts. After 2018, CBO thinks that most of the increase in the number of uninsured would stem from changes the AHCA would make to Obamacare’s expansion of Medicaid, an expansion that allowed many more low-income adults to enroll in the program. The bill would “freeze” enrollment in that program on January 1, 2020. Medicaid enrollees would trickle off the rolls as their incomes changed. And this would lead to another big decline in coverage. The number of uninsured, CBO projects, would rise by 21 million in 2020 and hit 24 million in 2026.
- The individual market would remain small but stable. CBO projects that as the individual market shrinks, premiums would rise between 10 to 15 percent as some healthy people flee in 2018. But over the next few years, the agency expects premiums to go down to 10 percent lower than under Obamacare. CBO thinks more young people will come into the market, as the GOP plan makes a number of changes to make the market more appealing to younger, healthier enrollees.
- AHCA would be a huge cut to Medicaid. CBO estimates it would reduce spending on the health program for low-income Americans by $880 billion over the next decade. This helps explain why AHCA would reduce the deficit: The bill is spending a lot less money on entitlement programs.
The CBO doesn’t always get predictions exactly right. But they’re the best estimate we have.
In the lead-up to the CBO report, high-level Trump administration officials began laying the groundwork to discredit the nonpartisan budget agency.
“If you're looking at the CBO for accuracy, you're looking in the wrong place,” White House press secretary Sean Spicer said last week. “They were way, way off last time in terms of how they scored and projected Obamacare."
Much of the criticism centered on the fact that CBO previously overestimated the number of people who would enroll on the marketplaces. That is true: Earlier CBO reports estimated that the Obamacare marketplaces would have 26 million enrollees this year. Last year, CBO revised that estimate to 15 million.
What critics don't mention is that CBO also underestimated how many people Medicaid expansion would cover. The two have essentially offset each other. Obamacare is covering just about as many people as CBO expected back in 2013, before the expansion started.
Economic projections are a tricky business, and the CBO has never claimed to be able to perfectly predict the future. Instead, former CBO Director Robert Reischauer recently told my colleague Andrew Prokop that in a world of politically motivated projections, “CBO’s function is to provide a dose of reality.”
Doug Elmendorf, who ran CBO during the Obamacare debate, estimates that the office had a team of 40 health analysts working on those reports. He described in more detail to Prokop how they make projections:
CBO has spent the last 15 years building and improving models of health insurance in this country. Those models are based on empirical evidence about the way businesses and individuals respond to incentives regarding health insurance. The models are based on discussions by CBO analysts with the outside advisers that CBO gathers. The models are based on careful use of big data sets. And ultimately on judgment. There is no perfect model of the world.
CBO, as Elmendorf says, cannot provide a perfect model of the world. But what it does provide, which is important, is nonpartisan analysis of how the bills Congress debates would affect the country. It provides a best guess for what will change — and in this case, its best guess is that millions of people who currently have coverage no longer will should AHCA pass.