Expert: CBO Still Ascribes ‘Magical Powers’ to Obamacare Mandate

The new official “score” of the House-passed health care overhaul looks a lot like the last one.

The Congressional Budget Office on Wednesday released an analysis of the American Health Care Act that closely resembles its projections of the an earlier version of the bill that Republican leaders pulled in March when it become clear it did not have enough votes to pass.

“The CBO is still ascribing almost magical powers to the insurance mandate. They still believe, despite all evidence, that [Obamacare] is going to get close to their original projection.”

Republicans made changes to the bill, most significantly including flexibility for states that want to opt out of some of the regulations of Obamacare. But Wednesday’s forecast envisions a similar impact.

Overall, the budget office projects $119 billion in taxpayer savings over 10 years. That is $32 billion less than the $337 billion in deficit reduction projected in March.

The new report still forecasts a massive reduction in the number of people who would have insurance. By fiscal year 2026, forecasters believe that 23 million fewer people would have insurance than under current law. That is a slight improvement over the previous projection of 24 million fewer.

Budget forecasters base their predictions to a large degree on the assumption that millions of people will stop buying health insurance if Congress repeals the mandate in the Affordable Care Act requiring them to do so.

Health Bill Budget Impact
Budget changes 2017-2026
Medicaid changes-$834B
Reduced subsidies-$276B
Stability grants$117B
Eliminating mandate$210B
Tax repeals$664B
Source: Congressional Budget Office

“The CBO is still ascribing almost magical powers to the insurance mandate,” said Grace-Marie Turner, president of the Galen Institute. “They still believe, despite all evidence, that it [Obamacare] is going to get close to their original projection.”

Turner, who supports the Republican bill, said the Congressional Budget Office underestimates the impact reforms that would give states flexibility to allow insurance companies to offer less expensive plans that provide fewer services. More affordable plans will make people actually want to buy insurance rather than being forced to, she said.

“They’re the only ones who think the individual mandate will work,” she said.

Rep. Adam Kinzinger (R-Ill.), who voted for the bill, told CNN’s Wolf Blitzer that many of the people who would “lose” insurance would voluntarily forego coverage.

“We believe, philosophically, that the government shouldn’t compel somebody to buy insurance,” he said. “So there are going to be some people, as there are now even under Obamacare — they choose to take the penalty instead of the coverage — that will choose not to take it.”

Sen. David Perdue (R-Ga.) argued that urgent action is needed to address skyrocketing premiums and dwindling choices as insurance companies pull out of the individual market in many states.

CBO vs. Reality
Enrollment through government health exchanges
Source: Department of Health and Human Service

“Regardless of any CBO score, it’s no secret Obamacare is collapsing under its own weight,” he said in a statement. “Families need real relief now from the limited choices and skyrocketing costs of the failed law. Doing nothing is not an option.”

The Congressional Budget Office projects that insurance premiums in the individual market would jump compared to current law by an average of 20 percent next year and 5 percent in 2019. Beginning in 2020, however, average premiums would start to fall. By 2026, they would be lower than under current law by 20 percent or more.

The decline would depend on whether states received waivers to drop regulations on insurers. Forecasters made the following estimates:

  • Average premiums would be 4 percent lower by 2026 than under current law in states that did not seek waivers. The CBO projects that half of Americans live in those states. The report attributes the decline to a belief that insurance customers would be younger and healthier under the GOP plan as older and sicker people drop insurance.
  • Average premiums in states that got waivers allowing moderate changes would be 20 percent lower by 2026 than under current law. This would affect about a third of Americans, according to the report.
  • Average premiums in states that got waivers to allow less comprehensive insurance and let insurers charge more based on people’s health status would have even lower premiums. The bill would require insurance companies to impose a 15 percent surcharge on anyone who let their insurance lapse and then signed up on the individual market. But a state could let insurance base the surcharge instead on pre-existing conditions. The budget office indicated that premiums would be lower but that it could not project a specific number.

The budgetary savings are the most important aspect of the report from a procedural standpoint, because it allows the Senate to pass the bill with 51 votes rather than 60. But Republican leaders already have said that they will start from scratch when crafting a bill. If the Senate does pass its own plan, that would require a House-Senate committee to negotiate a final bill.

Progressives immediately seized on the coverage estimates to bash the House plan.

"This CBO score highlights what we already knew — the AHCA is cruel, deadly and irresponsible," NETWORK Lobby for Catholic Social Justice Sister Simone Campbell said in a prepared statement.

But the Congressional Budget Office has been wildly wrong on past projections, including on health care. The office projected in 2010 that 23 million Americans would have health insurance through government-run health exchanges by 2017. The actual figure is about 12.2 million.

According to the American Action Forum, the cost per enrollee of providing subsidies to low- and moderate-income customers on the exchanges is about $1,200 more than originally estimated because a higher than anticipated share of customers qualified for government assistance.

Last Modified: May 24, 2017, 9:22 pm

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