Budget Forecasters Renew Extraordinary Faith in Insurance Mandate
CBO sees 18 million fewer covered Americans under 'clean' repeal — before cuts even take effect
The Congressional Budget Office is nothing if not consistent.
The budget office on Thursday forecast that a revised Senate plan to repeal and replace Obamacare would result in 22 million fewer people with insurance by 2026 compared with current law. That comes on the heels of an analysis Wednesday forecasting that a “clean” repeal would result in a staggering 32 million fewer people with insurance and that premiums for the average “silver” plan would be 25 percent higher than it currently costs.
Most analysts concur that the number of uninsured Americans would grow under the clean version of the bill, which would eliminate federal funds used to expand Medicaid and provide subsidies to lower-income people but keep the Affordable Care Act’s protections for people with pre-existing conditions and other regulations.
But some health policy analysts and advocates of market-based reforms argued that the budget office dramatically overestimates the impact.
“The CBO’s detachment from reality is really highlighted by this,” said Grace-Marie Turner, president of the Galen Institute, which has lobbied for repeal of Obamacare.
Previously, the budget office forecast 23 million fewer insured under a repeal-and-replace plan the House of Representatives passed and 22 million fewer under a proposal unveiled by Senate Republican leaders. When it became clear the Senate plan could not pass, Majority Leader Mitch McConnell (R-Ky.) turned to a bill modeled on one that passed in 2015 — but ran into a veto by then-President Barack Obama.
The clean bill would repeal the parts of Obamacare that can be axed without a filibuster-proof majority. Mandates that people buy insurance and that larger companies offer it to employees would be repealed immediately, while the financial provisions would not take effect until 2020. The idea is that the delay would give Congress time to develop an alternative.
The budget forecasters assume that millions of people who are not sick would decide not to have insurance if the government did not mandate it. The forecast assumes that in 2019 — before elimination of Medicaid expansion funds and repeal of subsidies took effect — 18 million fewer people would have insurance.
That is not far off the 24.7 million people who currently have insurance from the Medicaid expansion or through the online exchanges set up by the government.
Robert Graboyes, a senior research fellow and health care scholar at George Mason University’s Mercatus Center, said the budget office is one of the more competent, nonpartisan organizations in Washington.
“But they tend to be wrong on all the numbers they put out,” he said.
Graboyes said the CBO has to operate under parameters set by Congress. Many of the assumptions made during analyses of previous health care bills have been wrong, he said.
“What they’re really doing is comparing a fuzzy estimate against a nonexistent hypothetical,” he said. “This pretty much does the same.”
Perhaps the most glaring red flag is Medicaid, according to experts. The latest projection foresees 6 million fewer Medicaid recipients by 2019. The forecasters wrote that they do not believe that people would drop out of Medicaid. But they wrote that many would fail to re-certify and that some newly eligible people would not sign up in the first place if the government eliminates the mandate that they enroll.
Graboyes questioned that assumption — particularly since people poor enough to qualify for Medicaid can claim an exemption from paying the penalty for not having insurance under current law.
“It’s sort of hard to justify that assumption,” he said.
Jonathan Keisling, a health care data analyst at the American Action Forum, also noted that even if people did fail to sign up for Medicaid, they would be retroactively enrolled if they sought treatment at a doctor’s office or hospital. That means they would be technically uninsured but not so in practice.
Keisling said the CBO is using as a starting point, to make its projections, an old baseline from 2016 that has proven inaccurate. It projected 18 million customers in the exchanges by 2018, which would require an increase of nearly 8 million by next year.
“They had more people in the individual market than there will be in 2018 … The CBO was just wrong in its baseline,” he said. “We’re just not going to make it to 18 million in 2018 … It’s a fantasy.”
The CBO projects near-total destruction of the individual insurance market if partial repeal took effect. It forecasts that insurers in some markets would exit altogether next year, leaving 10 percent of the population without any private insurance options. That would grow to half of the population by 2020 and to 75 percent by 2026.
Graboyes said that is possible, since some states suffered similar collapses in the 1990s when they experimented with prohibiting insurers from charging sick people higher premiums without requiring citizens to buy insurance.
But Keisling said he finds it implausible.
“That was not the way it was pre-ACA,” he said. “I really don’t see how CBO gets to that conclusion.”