Republican Health Care Blame: It's Simple Math, The CBO Makes Clear

WASHINGTON, DC — How could the stated Republican intentions to improve the country's health care system and increase access to insurance manage spawn a plan that would create millions of newly uninsured, whacking a disproportionate number of the poor, sick and elderly?

Easy: Math.

The GOP plan cuts direct government spending on health care by nearly $1.2 trillion (that's trillion with a "t") compared to money that would be spent under Obamacare.

As a result, the proposed plan, the American Health Care Act, would add an extra 14 million people to the ranks of the uninsured by next year and 23 million by 2026, the Congressional Budget Office said Wednesday. The AHCA, the GOP alternative to Obamacare, passed the House earlier this month with no Democratic support and without estimates on its cost and impact on the number of people who would lose insurance.

The non-partisan CBO analysis makes clear that the plan would not come close to fulfilling President Trump's campaign promises that Obamacare would be replaced by a health care system that would cover all Americans with lower costs and better care.

The House plan, the CBO concluded, would indeed reduce premiums for some people but benefits for about half the country would be cut and would likely exclude mental health and addiction treatment services, maternity care or rehabilitation services. Medical deductibles would also increase.

If Republicans had managed to figure out a plan that would cut more than a trillion dollars in funding while increasing the number of insured people, lowering insurance costs and improving the quality of care, they would have shocked health care experts of every political persuasion.

The AHCA, though, would clearly succeed in one category: redistributing money for health to those of wealth.

The plan would cut taxes for high-income people and repeal taxes and fees on manufacturers and insurance companies by that generated hundreds of billions of dollars to help fund Obamacare.

To cover those tax breaks, the GOP bill would cut Medicaid insurance by $834 billion and subsidies for poor and moderate-income people buying insurance by $276 million.

“Premiums would vary significantly according to health status and the types of benefits provided, and less healthy people would face extremely high premiums,” the budget office concluded.

The Republican bill would also send insurance costs spinning out of control for 50 million people within three years, the CBO saidet.

Republicans, sacked with a House reform plan less popular and less generous than Obamacare, took solace in the budget office's estimate that the AHCA would reduce the federal deficit by $119 billion between 2017 and 2026.

"This USCBO report again confirms that the American Health Care Act will lower premiums and the deficit," Republican Speaker of the House Paul Ryan said in a tweet.

Ryan's statement, though, is not entirely accurate. Overall, the cost of premiums under the American Health Care Act would increase an average of 20 percent next year and 5 percent in 2019, compared to what they would be under current law, the budget office estimates. Costs would decrease by 10 percent in 2026.

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Virtually every public poll on health care reform shows large majorities do not want a plan that reduces the number of people insured. Under the GOP plan, the budget report concludes, the number of uninsured would skyrocket from 27 million people to 41 million next year and to 51 million by 2026.

"This report should be the final nail in the coffin of the Republican effort to sabotage our health care system," said Senator Chuck Schumer, the senate's minority leader.

The CBO also estimated that while insurance markets would be stable in most of the country under the GOP plan, the new law would destabilize insurance markets for about 50 million Americans by 2020.

But that average includes costs that would vary substantially in different areas and among people within the same state. Those states that obtain a waiver that allow insurance companies to increase rates for those with pre-existing conditions or a separate waiver that allows insurance companies to sell premiums that don't include benefits for such medical costs as maternity care will see premiums lower than states that require more benefits and protections for the sick.

Under the budget office's analysis:

• About half the population lives in states that will not seek either waiver. For those people, insurance costs are predicted to decrease an average of 4 percent in 2026 compared to what they would be under current law. But that average would include far lower costs for young people and far higher costs for the elderly.
• About one-third of the population lives in states that would make moderate changes to minimum coverage requirements. In those states, average premiums, overall, would be roughly 20 percent lower in 2026 than under current law primarily because insurance policies would provide fewer benefits.
• For the 50 million people or so in states that would allow cuts in benefits and permit premiums to be set based on a person's health status, the budget office expects average costs to decrease. But that's primarily because benefit requirements could allow insurance companies to exclude coverage, for example for maternity care. Rates would also be reduced because insurers would cover mostly people who need it least. Insurers could set rates for less healthy people so high they would be driven from the markets, despite claims from GOP leaders that funding added to the bill would protect the sick.

"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," the report said.

President Trump, Ryan and other Republicans have frequently railed against Obamacare, noting that premiums have risen sharply since passage of the law. The CBO report, while noting that there are serious problems under the current system, paints a much less bleak picture of the status quo.

Health and Human Services Secretary Tom Price focused on rising premiums under Obamacare while faulting the budget office's report while offering no cost analysis of his own.

“The CBO was wrong when they analyzed Obamacare’s effect on cost and coverage, and they are wrong again,” Price said.

Democrats acknowledge the Affordable Care Act has problems but blame any instability on Republican efforts to undermine the Affordable Care Act including threats to cut off payments to insurance companies. Some of those companies, uncertain about the financing mechanisms that can make the difference between profitability and losses, have decided to avoid the risk and end coverage in some areas.

"Although premiums have been rising under current law, most subsidized enrollees purchasing health insurance coverage in the nongroup market are largely insulated from increases in premiums because their out-of-pocket payments for premiums are based on a percentage of their income; the government pays the difference between that percentage and the premiums for a reference plan," the CBO report said. "Nevertheless, some areas of the country have limited participation by insurers in the nongroup market under current law."

Senate Republicans have acknowledged problems with the House plan and have been working in secret, without hearings or input from Democrats, on their own version of health care reform.

“Beyond likely reiterating things we already know — like that fewer people will buy a product they don’t want when the government stops forcing them to — the updated report will allow the Senate procedurally to move forward in working to draft its own health care legislation,” Senator Mitch McConnell, the majority leader, said a few hours before the report was released.

But like Ryan's remarks, McConnell's claim does not accurately describe the report. The CBO says that in many cases, people will become uninsured because they are unable to pay the cost due to the AHCA's cuts, not because they don't want health insurance.

The CBO scores are considered non-partisan, and the current head of the office was selected by Republican lawmakers.

Peter Suderman, a policy writer for Reason, noted on Twitter that creating a score for a bill like the AHCA is very difficult because of all the unknowns involved.

"CBO has always struggled - reasonably - to describe and quantify the uncertainty of its projections," he wrote. "AHCA score may be biggest challenge yet."

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Photo by Alex Wong/Getty Images