It's been nearly two weeks since the Congressional Budget Office (CBO) released its analysis of the Republicans' Obamacare replacement plan, known officially as the American Health Care Act (AHCA), and unofficially as "Trumpcare."
Trumpcare appears to be bad news for the poor and elderly
In many ways, the CBO's report foretold of a nightmare to come for millions of Americans currently insured through an Affordable Care Act (ACA, or Obamacare) health plan, or through the expansion of Medicaid, which 31 states and Washington, D.C., chose to undertake. According to estimates from the CBO and the Joint Committee on Taxation (JCT), 14 million people would be expected to lose their insurance coverage beginning in 2018, with a grand total of 24 million more people being uninsured by 2026 than would be under the existing law.
The CBO and JCT primarily attributed this large spike in uninsured rates to the two major changes Republicans intend to make to the Medicaid program.
First, Trumpcare would disallow states from expanding their Medicaid programs beyond Jan. 1, 2020. Some 15.7 million people earning between 100% and 138% of the federal poverty level have enrolled in Medicaid or the Children's Health Insurance Program since the October 2013 expansion commenced, and many would struggle to afford healthcare premiums on their own. At the same time, states could attempt to keep these grandfathered patients on Medicaid, but they'd have to come up with all of the added revenue, which is no easy task for any of the 31 states.
The second major change includes block-granting Medicaid to the states on a per capita basis. This change to a fixed-income payout means states will receive less money for their traditional Medicaid members (those earning 100% or less of the federal poverty level). This makes it even more unlikely that the Medicaid expansion members will be able to keep their coverage, and it could even mean reimbursement cuts for traditional Medicaid patients.
The CBO also found that the elderly could be on the line for considerably higher healthcare costs, depending on their income. As a reminder, Trumpcare removes the ACA's income-based subsidies and replaces them with age-based tax credits. Even though people in their 60s would receive twice as much in annual tax credits ($4,000) as someone in their 20s ($2,000), low- and middle-income seniors could be paying quite a bit more.
An example provided by the CBO of a 64-year-old earning $26,500 per year shows that this individual would annually pay roughly $1,700 in premiums under Obamacare, but $14,600 in premiums under Trumpcare. It's worth pointing out that Trumpcare allows insurers to charge older adults five times as much in premiums compared to younger adults, up from a maximum of 3-to-1 under Obamacare.
In other words, there's some serious concern that Trumpcare could be a disaster for tens of millions of Americans.
You probably overlooked these important facts and figures
However, as is the case with nearly all legislation that comes out of Washington, there is another side to this story. If you've been laser-focused on the uninsured estimate by the CBO, you've probably missed three important points.
1. Premiums would actually fall 10% by 2026
A lot of discussion has revolved around what might happen to premiums for older Americans. But what most people are probably glossing right over is that long-term premiums for single individuals are expected to fall by an aggregate of 10% by 2026, based on the CBO's estimates.
Initially, the CBO anticipates that premiums in the individual market will rise. If the AHCA passes, the individual mandate will be eliminated, and the Shared Responsibility Payment associated with not purchasing health insurance will go away. This is expected to reduce the enrollment of healthier young adults until the beginning of 2020, which is when Obamacare's subsidies would officially end.
But, beginning in 2020, young adults in their 20s will begin receiving $2,000 annually in tax credits, which for many will make healthcare premiums far more affordable (i.e., their Obamacare subsidies were lower than what they are estimated to receive under Trumpcare). The Patient and State Stability Fund will also limit costs to insurers for high-risk patients.
Also, insurers will have more freedom to transfer costs to consumers by tinkering with co-pays, coinsurance, and deductibles. This means there is real possibility that premiums for healthier adults will fall, encouraging more to enroll. Obamacare failed to court enough healthier young adults to make the program sustainable, according to insurers, but Trumpcare may not share that same fate.
2. It reduces federal deficits by $337 billion over the next decade
Another likely overlooked figure is that Trumpcare would wind up reducing the federal budget deficit by $337 billion over the next 10 years.
On one hand, revenue generated from the collection of the Shared Responsibility Payment and employer mandate penalties would be eliminated, and there would be an estimated aggregate cost of $361 billion for the new age-based tax credits between 2020 and 2026. There would also be an increase in outlays to cover the Patient and State Stability Fund.
However, these outlays would be more than offset by the $880 billion reduction in Medicaid payouts over the next decade, as well as the elimination of Obamacare income-based subsidies.
This reduction in the federal deficit is important since it would give Republican lawmakers some breathing room to either enact a federal infrastructure plan over the next decade, or move forward with long-term plans to cut the annual federal deficit, and perhaps national debt.
3. Previous CBO estimates for Obamacare weren't even in the ballpark
Last, but certainly not least, most everyone has probably overlooked the fact that the CBO was very, very wrong when it came to its projections of Obamacare.
According to a March 2015 report from the CBO, roughly 24 million people were expected to gain coverage through Obamacare's marketplace exchanges as of 2017. Based on recently released data from the White House, just 12.2 million people enrolled for 2017. It's worth mentioning that attrition typically takes its toll on the initial enrollment figures as people drop out due to non-payment or a shift toward employer-based coverage. When 2017 ends, it's all but assured that Obamacare's marketplace enrollment will be less than half of what the CBO predicted. That's not even in the ballpark!
This difference serves as a good reminder that the CBO's figures are just estimates and that there are a number of variables it simply can't predict when taking into account a market of 270 million-plus people. Though the data could just as easily be worse than anticipated, Trumpcare's estimated increase in the uninsured of 24 million may also be grossly overstated.
Only time will give us the answer.
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