The CBO says 23 million fewer Americans will have insurance under the AHCA.

CBO Confirms That the Republican Health Care Bill Is Still a Garbage Dump of Bad Ideas

CBO Confirms That the Republican Health Care Bill Is Still a Garbage Dump of Bad Ideas

Moneybox
A blog about business and economics.
May 24 2017 8:29 PM

CBO Confirms That the Republican Health Care Bill Is Still a Garbage Dump of Bad Ideas

paul_ryan_pondering_his_life
Crackerjack job, Paul.

Joshua Roberts/Reuters

Meet the new American Health Care Act—it's pretty much just as god-awful as the old American Health Care Act.

The nonpartisan Congressional Budget Office reported Wednesday that the Obamacare repeal bill, which Republican House leaders successfully rushed through a vote earlier this month after several major revisions before the CBO could score their impact, would leave 23 million additional Americans without health insurance by 2026. This is a slight improvement over the previous edition of the legislation, which would have left 24 million more individuals uncovered. The updated legislation would also cut $834 billion from Medicaid and hand out tax cuts worth $661 billion, largely to upper-income households and corporations. If made law, the bill would still be absolute hell for aging, lower-middle-class workers. The report says a 64-year-old earning $26,500 would have to pay $13,600 for a health plan under the AHCA, up from $1,700 under Obamacare.

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On the bright side, some people would get cheaper coverage with fewer benefits—which is great for young, healthy men in particular—and gutting Medicaid and reducing spending on insurance subsidies would cut the deficit by about $119 billion. So there's that.

In retrospect, passing this bill before the CBO could weigh in was a canny move by Speaker Paul Ryan. It's not just that the headline numbers are grisly—though they really, really are. It's that the CBO's analysis also shows how pointless and ill-conceived the conservative- and moderate-appeasing compromises that greased this legislation's path out of the House truly were. Republicans have mostly just rearranged the rusted cans and busted tires in their garbage dump of a law.

Republicans struck two major deals in order to pass the AHCA. First came the so-called MacArthur amendment—which represented the grand bargain between hard-line conservatives, who wanted to scrap all of Obamacare's insurance regulations in order to bring down premium prices, and relative moderates, who were nervous about doing away with popular consumer protections, like rules that bar carriers from discriminating against customers with pre-existing medical conditions. Rather than eliminate many of Obamacare's key pieces entirely, the deal gave states the ability to opt out of them by applying for waivers. In particular, it would let them do away with the law's essential health benefit requirements, which force insurers to cover certain services, and its community rating provisions, which prevent carriers from charging customers more because they're in bad health. Basically, blue states could keep their market regs if they liked.

Then came the Upton amendment, which added $8 billion to the bill to help insulate sick patients in waiver states from potential insurance premium hikes. While this was an obviously feeble amount of money, it was enough of a political fig leaf to win support from wavering moderates and get the bill passed.

What does the CBO have to say about all this? It makes short work of the Upton amendment, writing that though it pushes down costs as intended, the effect “would be small because the funding would not be sufficient to substantially reduce the large increases in premiums for high-cost enrollees.” In other words, it's barely worth talking about.

The number-crunchers spend much more time on the MacArthur amendment, since it could fundamentally reshape how insurance is sold in some states. The report estimates that half of the country would live in places where lawmakers would choose to keep all of Obamacare's rules. There, premiums would be a mere 4 percent lower by 2024, largely because the AHCA's basic structure would tend to price older Americans out of the insurance market and draw in younger customers, who pay less for their coverage. Another third live in states that would nix many of the essential health benefits Obamacare now guarantees, such as maternity and mental health care. Those places would see a 20 percent drop in premiums by 2026 compared with current law, “primarily because, on average, insurance policies would provide fewer benefits.” However, not everyone would benefit equally. “The reductions for younger people would be substantially larger and those for older people substantially smaller,” the CBO notes. People who needed more extensive medical care would also have to pay more out of pocket.

Finally, the CBO thinks that about 1 in 6 Americans live in states that would drop both the essential health benefit and community rating rules. This would create significantly cheaper insurance for people with few health care needs while leaving the sick to pay “extremely high premiums” that would “rapidly rise” over time. Technically, insurers would still be required to sell to people with pre-existing conditions, and could only raise prices for those who have gaps in their insurance market. But for reasons previously spelled out well by analysts at Brookings, the CBO still thinks the markets in those states would bifurcate—one with cheap insurance for the healthy, and another with wildly expensive coverage for the ill. The CBO thinks premiums would be somewhat lower in these states for customers who could afford coverage. But because costs would vary so much based on health status, the office doesn't bother estimating how much they'd fall on average.

The funny part of all this is that, in the end, the new and improved AHCA still doesn't do much more to lower insurance premiums—which appears to be the GOP's only significant health care goal—compared to the version that died without a vote on the House floor. That edition would have dropped the cost of coverage by 10 percent by 2026, according to the CBO, though largely by raising them for the old and lowering them for the young, instead of changing the benefits that were offered. Ultimately, we're not talking about a major difference in effect—and there's no reason someone who thought the original AHCA was too toxic to support should be particularly pleased with what actually passed. Both renditions make life harder for older, sicker Americans to help out younger adults who need less care, ultimately achieving a marginal drop in the cost of insurance—and leaving millions without coverage in the process. The current bill makes changes around the edges; the cruelty is pretty much the same.

Jordan Weissmann is Slate’s senior business and economics correspondent.