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The most devastating paragraph in the CBO report

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The Congressional Budget Office sent a clear message to Republican legislators Wednesday: Your bill does not do what you say it does.

CBO on Wednesday released a long-awaited analysis of the Republicans' American Health Care Act, which passed the House on May 4. It projects that:

  • 23 million fewer Americans would have health coverage should the bill become law.
  • The bill would reduce the deficit by $119 billion.

It would hit the poor and elderly especially hard; a low-income 64-year-old Obamacare enrollee would see her premiums rise between 700 and 800 percent.

We knew much of this from the last CBO report on the Republican bill, which had fairly similar estimates. We did get something new, however, in this particular report: a complete rebuke of Republicans' claim that the bill they voted for will protect Americans with preexisting conditions.

For weeks now, Republicans have claimed that their new bill will protect sicker Americans. "It will be every bit as good on pre-existing conditions as Obamacare," President Trump told Bloomberg earlier this month. House Speaker Paul Ryan has a website up, right now, where he declares "VERIFIED: MacArthur and Upton Amendments Strengthen AHCA, Protect People with Pre-Existing Conditions."

CBO says this isn't true — and is unequivocal on the point. There is this one paragraph in particular that is especially devastating for the Republican plan:

People who are less healthy (including those with preexisting or newly acquired medical conditions) would ultimately be unable to purchase comprehensive nongroup health insurance at premiums comparable to those under current law, if they could purchase it at all — despite the additional funding that would be available under H.R. 1628 to help reduce premiums. As a result, the nongroup markets in those states would become unstable for people with higher-than-average expected health care costs.

CBO estimates that about one in six Americans would live in states that apply for waivers from key Obamacare provisions, like the requirement to charge sick and healthy people the same prices or cover a set of essential health benefits.

Sick people in those places just would not have a lot of options. The market for them would look a lot like the market they faced before the Affordable Care Act passed: hospitable to the healthy and hostile to the sick. The money the Republican plan puts toward high-risk pools isn't nearly enough to prevent that situation.

Premiums would go down under the AHCA — about 10 to 30 percent in states that apply for waivers, CBO estimates — and Ryan quickly seized on this fact. He tweeted out a graphic lauding how the AHCA "achieves our mission: lower premiums and lowering the deficit."

But let's be clear: The Republican plan achieves lower premiums by breaking the promise to protect preexisting conditions. Premiums drop because sick people who need coverage more would drop out of the marketplace. This plan does not deliver on that promise in any way, shape, or form.

Let's pause on one other chart in the CBO report. There is a chart on the very last page of the CBO report that really lays bare the trade-offs of the Republican plan. It shows how premiums would change for Obamacare enrollees in different situations:

Congressional Budget Office

I circled two numbers I think are especially important: how premiums would change for a low-income, elderly Obamacare enrollee. Under current law, a 64-year-old who earns $26,500 pays $1,700 annually in premiums for coverage. Under the AHCA, that would jump to either $16,100 or $13,600 depending on where that person lives. At a minimum, her premiums would increase 700 percent, eating up half her income.

There are winners in the AHCA: people who are younger and healthier. You can see in this chart, for example, that a 21-year-old who earns $68,200 would see her premiums decline from $5,100 to $1,250.

There isn't any magic to how the Republican bill cuts premiums. There is not a secret plan in here to lower the price of doctor visits or get people to use less health care. There is a plan to make health insurance so expensive for people who are sick and people who are old that they can no longer afford it.

Read more on the CBO score from Vox

  • Dylan Scott breaks down the CBO report in nitty-gritty, wonky detail.
  • German Lopez zooms in on how the AHCA would affect the elderly.

Chart of the Day

Blue KC will exit the Obamacare marketplaces, leaving 25 Missouri counties with no insurers in 2018. The insurance plan cited its financial losses in recent years, as well as the uncertainty over Obamacare's future, in explaining its decision. Read more in my story here.

Kliff’s Notes

Your daily top health care reads, with research help from Caitlin Davis

Today's top news

  • "Healthcare CEOs have their lips zipped on AHCA politics": "Insurer and provider executives are hiding behind industry lobbying groups, including America's Health Insurance Plans and the American Hospital Association, instead of using their power to influence lawmakers on the GOP's American Health Care Act. Their silence is a missed opportunity to serve their patients' best interests, some experts say." —Shelby Livingston, Modern Healthcare

Analysis and longer reads

  • "When the patient is a gold mine: the problem with rare-disease drugs": "Orphan drugs have also caused a seismic shift in treatment costs. The average U.S. patient on an orphan drug last year relied on a $136,000 therapy, a figure that’s climbed 38 percent since 2010. A fraction of a teaspoon of Soliris, administered in a single 35-minute treatment, costs more than $18,000, and patients might need 26 treatments a year for the rest of their lives." —Benjamin Elgin, Doni Bloomfield, and Caroline Chen, Bloomberg Businessweek

"Here's what Republicans would do if they were serious about pre-existing conditions": "If they want to make a credible promise to cover people with preexisting conditions, they shouldn't create a fixed-dollar fund that might run out. Instead they should define the benefit." —Josh Barro, Business Insider

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