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CBO: GOP Health Plan Will Bring Stability, Lower Costs – or not

Monday, March 13, 2017 14:03
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The Congressional Budget Office Releases Its 2010 Budget

The non-partisan Congressional Budget Office (CBO) released its report on the republican’s replacement for Obamacare saying that the American Health Care Act will bring stability to the individual market and reduce costs to taxpayers and the insured before undercutting their own report as “uncertain.” The CBO estimates that the AHCA will reduce federal deficits by $337 billion over the next ten years even with all the taxes that the bill repeals. The report also predicts that the bill will bring stability and lower premiums to some on the individual market.

Even though the new tax credits would be structured differently from the current subsidies and would generally be less generous for those receiving subsidies under current law, the other changes would, in the agencies’ view, lower average premiums enough to attract a sufficient number of relatively healthy people to stabilize the market.

The CBO did, however, claim that premiums would rise 15-20% per year more than they would under Obamacare, but caveated the prediction by basically undercutting the value of the report.

The ways in which federal agencies, states, insurers, employers, individuals, doctors, hospitals, and other affected parties would respond to the changes made by the legislation are all difficult to predict, so the estimates in this report are uncertain.

The discounting of reactions by providers, payers, and consumers is exactly why the CBO’s analysis is rarely worth the paper it’s printed on. Extremely sick people will be subsidized by the ‘Stability’ program in the AHCA which would insulate other individuals from the cost of their care. The fact that insurers were not able to charge a different premium for the old vs. young, sick vs. healthy is exactly what drove double and triple-digit premium increases. As premiums for young, healthy individuals drop to pre-Obamacare levels, more low-cost consumers will buy insurance. Obamacare relied on that demographic, but the unaffordable premiums kept them out of the market. Lastly, the CBO claimed that 24 million more people would be uninsured by 2026 than would have been under Obamacare – static analysis at its worst.

The increase in the number of uninsured people relative to the number under current law would rise to 21 million in 2020 and then to 24 million in 2026. The reductions in insurance coverage between 2018 and 2026 would stem in large part from changes in Medicaid enrollment—because some states would discontinue their expansion of eligibility,

The report assumes that Obamacare’s Medicaid expansion wasn’t going to collapse under its own weight. States will have to discontinue the expanded eligibility whether the ACA or AHCA is in effect. Under the AHCA, the law ends it. Under the ACA, the states would simply be unable to afford it any longer as the death spiral continued. The CBO’s analysis is fundamentally flawed because it assumes that Obamacare was going to live on, in its current form, for another ten years. With insurers and consumers fleeing the market at alarming rates and the ACA-approved plans driving families into financial ruin, Obamacare would collapse long before any of the estimates in this report came to pass. CDN –


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