CBO Projects People Won’t Buy Insurance Unless Mandated

The long-awaited forecast by the Congressional Budget Office apparently assumes that the only reason that most people got insurance under the Affordable Care Act is because the federal government required it.

The analysis of the proposed American Health Care Act projected that 14 million more people will be uninsured by fiscal year 2018. That is higher than the total number of customers receiving insurance through online health care exchanges run by the federal government and some of the states.

“Does that make sense to anybody? Because the plan doesn’t get rid of Medicaid expansion.”

“Most of that increase would stem from repealing the penalties associated with the individual mandate,” the nonpartisan budget office wrote in its forecast. “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.”

Amazingly, the report forecasts 5 million current Medicaid recipients will be uninsured by FY 2018 — even though changes to the Medicaid program in the bill do not take place until 2020.

“Does that make sense to anybody?” Office of Management and Budget Director Mick Mulvaney asked reporters outside the White House Monday. “Because the plan doesn’t get rid of Medicaid expansion.”

Health and Human Services Secretary Tom Price agreed, telling reporters at the news conference that it is “virtually impossible” that 14 million people would lose their insurance by fiscal year 2018.

“We disagree strenuously with the report that was put out,” he said. “We believe that our plan will cover more individuals at a lower cost and give them the choices that they want for the coverage they want for themselves and their family, not that the government forces them to buy.”

Overall, the forecast envisions the ranks of the uninsured climbing by 24 million by the end of the 10-year budget window. It does, however, predict the bill would shave $337 billion off the budget deficit by fiscal year 2026. The deficit-reduction projection is crucial, because it lets Republican leaders push through the law with a simple majority in the Senate as part of the budget.

[lz_table title=”Losing Insurance?” source=”Congressional Budget Office”]CBO projections of impact of American Health Care Act
|Fiscal Year,Additional Uninsured
2017,4 million
2018,14 million
2019,16 million
2020,21 million
2021,23 million
2022,23 million
2023,23 million
2024,24 million
2025,24 million
2026,24 million
[/lz_table]

But the bill has taken heavy fire from both sides of the political spectrum, and the estimate on the uninsured likely will complicate efforts to pass it.

Mike Needham, CEO of Heritage Action, told reporters on a conference call prior to the release of the CBO report the real measure is not the number produced by the agency but whether the bill relies on the same kinds of gimmicks that drafters of Obamacare used to obscure the true cost of the program.

He said the House bill keeps many of the costly regulations of the Affordable Care Act while rebranding subsidies in the law as tax credits. He said Congress should write a bill that gets rid of those regulations and subsidies altogether, and promotes a truly free market that reduces the cost of insurance.

Needham also said the bill should do more to encourages health savings accounts and unwind a system that ties insurance for most people to their jobs.

“You need to get at the fundamental bias in the tax code that encourages people to buy health insurance through their employer,” he said. “That’s going to be a tax reform process that allows people to … carry health insurance from one job to the next, or one job to a situation where maybe they leave their job.”

Mulvaney, the OMB director, agreed that a free market is the key but argued that the bill achieves that goal. He noted that the CBO projects that in 10 years, average premiums for single policy holders in the non-group market would be 10 percent lower than under current law.

“So it just confirms a lot of things that Tom and I have been talking about publicly, which is that we really do think that taking market competition, putting it back into health care, getting government out of the way will do what in health care what it does with everything else … Quality goes up and costs go down,” he said.

Drew Gonshorowski, a senior policy analyst at The Heritage Foundation, said the report looks almost as if the CBO had factored in a full Medicaid expansion repeal. Instead, the bill makes the federal-state funding split less generous to the states and denies Medicaid to people in the expansion population who leave the Medicaid rolls.

“It’s pretty interesting,” he said. “This bill assumes a greater number of uninsured people than gained insurance under the ACA.”

Democrats gleefully seized on the projections to thrash the bill.

“Trumpcare would be a nightmare for the American people, causing tens of millions to lose coverage and millions more seeing the cost of their health care going up,” Senate Minority Leader Chuck Schumer (D-N.Y.) said in a joint news conference with House Minority Leader Nancy Pelosi (D-Calif.).

[lz_related_box id=”403979″]

Schumer noted that 54 million Americans would lack insurance by fiscal year 2024 under the projections.

“That’s un-American,” he said. “That’s wrong.”

But Grace-Marie Turner, president of the Galen Institute, said the projection assumes that most people who got expensive plans under Obamacare will simply go without insurance. She said it fails to factor in a dynamic health care market that will produce insurance plans that will meet people’s varied needs.

“The CBO is looking at the world through CBO glasses,” said Turner, whose organization advocates free market health system reforms. “The market will have a new incentive to be able to provide their insurance … They [the CBO] don’t have a way of judging human behavior.”