CBO score shows 24 million more uninsured by 2026 under AHCA

March 20, 2017 at 6:09 AM Leave a comment

Crowd by Andrew Malone

Photo by Andrew Malone

Getting everyone into the tent proves trickier than anticipated

On the surface, it can be confusing what Republicans are trying to accomplish with their recently introduced American Health Care Act (AHCA). After all, no one consciously drafts a plan to reduce coverage and raise premiums; the ever-rising cost of health care will do that quite well on its own.  The CBO score shows higher costs in the near term, but then a 10 percent reduction in projected average premiums vs. the status quo in 2026.  CBO also projects that we will have 52 million uninsured in 2026, or an increase of 24 million over today.  As discussed in a previous post, for progressives this is ideologically unacceptable since they consider health care to be an absolute right.  Others with concerns likely fear the use of the increased number of uninsured as a campaign issue in the next election cycle.

Well, exactly what were the drafters trying to accomplish?  As we discussed in a previous post, many of the maneuvers in AHCA are purposed to draw in young, healthy people into the insurance pool, in order to offset the cost of older and sicker people.  In the conservative view, it is wrong for government to mandate the purchase of health insurance; instead, the product must be made attractive enough that young invincibles buy it voluntarily.  The increase in the allowed rating multiple from 3:1 to 5:1 does this, since having older people pay more means younger people pay less.  Another measure is the $100 billion Patient and State Stability Fund, which is money in the bill that is likely to be used by some states to make reinsurance payments to health plans, thereby lowering everybody’s premiums somewhat.

So could that work?  It’s possible to make insurance more affordable for the young by taking those steps, in my opinion.  The problem is that those actions also have other consequences:

  • First, when you shift the cost of insurance away from the young and healthy, you have to put it somewhere, and that appears to be to the old and sick. Premium projections for poor 60 year olds net of subsidies go up by about $10,000 a year.  For someone in this working poor group, the premium could be half of their entire salary.  As a result, CBO projections suggest that the uninsured rate for those age 50-64 making <$30K/yr. will rise from 12% to an impressive 30% of the population.  Again, no plan is able to take the same benefits and make the cost lower for everyone; if somebody pays less, somebody else has to pay more.  In essence, some of the people you were trying to subsidize in the first place end up uninsured as a consequence of the effort to make it more affordable for the young invincibles.
  • Second, the CBO projections say that by 2020, about 9 million fewer people will be buying coverage in the individual market. By 2026, those losses shrink to 2 million less, but this is largely because the CBO anticipates some employers stopping providing insurance as a benefit altogether, shifting people from employer-sponsored insurance to the individual market. The CBO agrees that more young people will sign up, but that will be more than offset by older people dropping coverage because they simply cannot afford it.  The reasons are complicated, but have to do with the CBO’s lack of confidence that the penalties in the AHCA for being uninsured will be as compelling as the individual mandate in the ACA.

The AHCA still has to work its way through more committees before it makes its way to the floor of the House.  There may still be amendments and revisions along the way.  There is even talk about a “sidecar” bill addressing sale of insurance across state lines and association health plans.  But currently, this shift of cost from younger and healthier to older and sicker is a big issue for Democrats and moderate Republicans (not to mention AARP, who have termed the AHCA an “age tax”).  That, in addition to the substantial increase in the uninsured rate, makes this bill tough to swallow for a broad swath of Congress and its constituents.  Whether it can survive with this shift is something that will be hotly debated in the next couple of weeks before Congress’ Easter recess.

 

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