The long-awaited Congressional Budget Office report on Trumpcare 2.0 is here, and it's every bit as bad as expected.
Earlier this month the House of Representatives passed the American Health Care Act after updating it from a similar version which did not come to a vote in March. The vote passed by a single-party majority, with 217 Republicans voting in favor and every House Democrat along with 20 Republicans opposed.
Wednesday's report incorporates the changes made while Paul Ryan wooed party voters, including loosening protections for people with pre-existing conditions and adding funds to help sick consumers cope with insurance costs.
It's going to take a few days to fully process, but there are a few headline takeaways:
Approximately 23 million people would lose their insurance.
Under the AHCA as passed, 14 million people would lose their insurance by 2018 compared to current law. That number would increase to 19 million in 2020 and finally 23 million people by 2026.
Most of those individuals would be people who either could not afford or could not access insurance. Some, "a few million" by the CBO's estimate, would be individuals with policies so threadbare as to not count as insurance at all. (These are plans which do not cover major medical risks, and so do not qualify as actual coverage.)
All told, the CBO estimates that under this law 51 million people will have no functional health insurance by 2026 compared to 28 million under current law.
It will destabilize individual health insurance for one sixth of all Americans.
Through 2020, the CBO expects individual health care markets to remain about as stable under the AHCA as they are under the ACA. That is to say, most marketplaces will continue to see sufficient demand from consumers to maintain both provider participation and affordable premiums. At the same time, as is currently the case, some local markets will see providers pull out due to instability, leaving few or no options.
However the CBO also expects "that about one-sixth of the population resides in areas in which the nongroup market would start to become unstable beginning in 2020." This instability will come from states taking advantage of waivers to eliminate protection for pre-existing conditions and essential health benefits.
It will lower costs on the young and the healthy and raise costs on the elderly and sick...
Per the CBO's report:
"[M]ost healthy people applying for insurance in the nongroup market in those states [which waive pre-existing condition protection] would be able to choose between premiums based on their own expected health care costs (medically underwritten premiums) and premiums based on the average health care costs for people who share the same age and smoking status and who reside in the same geographic area (community-rated premiums). By choosing the former, people who are healthier than average would be able to purchase nongroup insurance with relatively low premiums."
Many people will lose coverage due to pre-existing conditions...
Again, per the CBO's report:
"[T]he waivers in those states would have another effect: Community-rated premiums would rise over time, and 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."
Premiums will go up by more than 25% and insurance plans will offer considerably less protection...
Exactly how much premiums will increase requires some speculation.
The CBO projects that in 2018 premiums will increase by 20% relative to what they'd be under Obamacare, followed by another 5% increase in 2019. Starting in 2020, however, premiums would depend on state implementation.
In states which choose not to waive any protections, by 2026 healthy people will pay about 4% less than they would under Obamacare. The sick and the elderly will pay more given the looser restrictions about community pricing.
Premiums would go down by an average of 20% in states which choose to waive protections for essential health benefits and pre-existing conditions. However, this would be because "a younger and healthier population would be purchasing the insurance and because large changes to the (essential health benefit) requirements would cause plans to a cover a smaller percentage of expected health care costs."
In other words, costs would go down because insurance will cover fewer people and offer less protection.
Out of pocket spending will go up in states that waive protections...
The CBO projects that about one half of Americans live in states which will waive at least some essential health benefits. This will cause out of pocket spending to increase for many consumers of health care, including those with employer coverage, as current law caps out of pocket spending such as co-pays and deductibles for all essential services.
The CBO expects states to exclude essential health benefits including maternity care, mental health and substance abuse benefits, rehabilitative and habilitative services, and pediatric dental benefits.
It does not spend enough money to stabilize premiums or cover sick people...
As an incentive to purchase moderate votes, House leadership added an additional $8 billion over ten years to stabilize premiums and fund high-risk pools. This will make little or no difference.
Per the CBO report:
"Although CBO and JCT expect that federal funding would have the intended effect of lowering premiums and out-of-pocket payments to some extent, its effect on community rated premiums would be small because the funding would not be sufficient to substantially reduce the large increases in premiums for high-cost enrollees."
High risk pools are notoriously expensive to run and almost never receive sufficient funding. As the CBO points, Obamacare tried this approach and spent $2.5 billion in just two years to cover 100,000 people.
It will reduce the deficit by $119 billion over 10 years...
The AHCA as passed will cut $1.1 trillion of spending and $992 billion in taxes, for a net savings in government spending. This is more deficit reduction than the CBO projected for the original version of this bill.
Most of the savings would come from cutting $834 billion from Medicaid. At the same time, the law would repeal $664 billion in "taxes on high-income people, fees imposed on manufacturers and excise taxes enacted under the ACA."
Finally, repealing the individual mandate would cost an anticipated $210 billion in lost penalty payments from employers and the uninsured.
It's not that different from the original report, and that's not great news for passage...
Back in March, the original CBO report was often cited as a chief reason why the AHCA never made it to the Congressional floor. The issue became politically toxic, causing highly publicized town hall meetings during which Republican congressmen faced constituents increasingly angry over an Obamacare repeal.
In most major aspects this report is very similar to the last one. That does not bode well for passage in the Senate.
Finally, the CBO has a history of being right about these things...
It has become a talking point among supporters of the AHCA that the Congressional Budget Office can't be trusted. Specifically, they argue, the office got its score badly wrong regarding the Affordable Care Act and so should not be trusted in this instance.
This would be a tenuous argument if it were true, as the more important question would be how well the CBO does in general, not whether it had made a single, high profile mistake. However it is not true.
The CBO's scoring of the ACA was largely accurate. This is not to say that the office got everything right, but neither is analysis held to that standard in any professional setting. The CBO got far more right than it got wrong, lending additional credibility to its analysis here.