Within seconds of the CBO report being released to the public, headlines were screaming 14 million to lose health insurance by 2018 if the AHCA is enacted. That number will increase to 21 million by 2020 and 24 million by 2026. By 2026, it is estimated that there will be 52 million uninsured people in the USA, the richest country on the planet. Even though Ryanites and Trumpettes (called the R&Ts from here on out) were already teeing up their lack of faith in CBO reports, now that we have access to the report, the spin will begin in earnest. So, I thought it would be worthwhile to actually read the report. You can too if you are so inclined, here’s the link. It is actually a pretty good read.
It should be no surprise that the people who will lose their health insurance coverage are disproportionately the poor. A large chunk of those who got insurance under the ACA (aka Obamacare) did so via the expansion of Medicaid and the savings are largely going to come from shrinking that program. Here’s a graph from the CBO report that compares the share of nonelderly adults (19-64-year-olds) without health insurance under the ACA vs the proposed AHCA:
Effects on the Federal Budget and on Premiums
The CBO estimates that the AHCA will reduce federal deficits by $337 billion over the 2017-2016 period. As I said, the largest savings will come from reductions in the number of people covered by Medicaid and eliminating Obamacare’s subsidies for nongroup health insurance. So, the government will indeed save money as one might expect when fewer people have government-funded healthcare.
What the report is silent on is the impact of all those newly uninsured will have on the overall cost of healthcare. Going back to the bad old pre-ACA days, we should all remember that so far, at any rate, we don’t actually let people die in the street in large number just because they don’t have health insurance. We tell them to go to the ER where they can receive really expensive care at later stages of their diseases. Hospitals will compensate for that uncompensated care by shifting costs onto their customers that have insurance or some other way to pay. Thus, we see $15 bandaid and the $2000 sprained ankle bills. And, guess what this does? It increases the cost of delivering care in a non-value added way so health insurers need to pay more. So what do insurers do? Raise their premiums, of course. Sorry guys, there is no free lunch.
The Republicans are counting on premiums coming down as market competition heats up. They never mention that one of the ways premiums will come down is by selling people crummy insurance that won’t be there for them when they get sick. The other way is by increasing individuals’ out-of-pocket costs. The ACA partially shielded people from this by having caps on maximum out-of-pocket and by requiring that marketplace health plans provide a minimum actuarial value (for example, a bronze plan has to cover at least 60% of the cost on average). The code Republicans use for removing these protections is that people can buy the health insurance they want. Not really, who really wants to buy insurance that doesn’t insure them when they need it? I suspect no one. But as our President said, “Nobody knew that healthcare could be so complicated.” And, by the way so is health insurance. So most people don’t figure out the are inadequately covered until they get sick and learn they get to pay a whole lot of the cost. Surprise! Our share is $500 yours is $5000.
I have written about the problem with high-risk pools before. Most don’t work because the costs of caring for high-cost patients is, well, very high cost. History has shown that most of these pools have been inadequately funded and therefore they fail. The CBO report points to the Federal funding for these state managed pools via something called the Patient and State Stability Fund. By pulling these high-cost individuals out of the general insurance pools, premiums could come down for the rest of us. But since 50% of Americans have at least one chronic condition and 25% have two or more, we are continually producing a pipeline of new high-cost people. In fact since the AHCA proposes repealing the Prevention and Public Health Fund that helps public and private entities carry out prevention, wellness and public health activities and many people who have chronic conditions will be kicked off of the insurance rolls, we may see that pipeline of people sick enough to be in the high-cost category accelerate rapidly. Way to go, guys.
Defunding Planned Parenthood
Fulfilling their dream of a lifetime, the Ryan bill (or whatever you call it), has language that would prevent federal funds being made available to any entity meets these criteria:
- A nonprofit organization described in section 501(c)3 of the IRS and exempt under section 501(a) of the code;
- An essential community provider that is primarily engaged in providing family planning and reproductive health services and related medical care;
- An entity that provides abortions—except in instances in which the pregnancy is the result of an act of rape or incest or the woman’s life is in danger; and
- An entity that had expenditures under the Medicaid program that exceeded $350 million in fiscal year 2014.
According to the CBO report, “only Planned Parenthood Federation of America and its affiliates and clinics would be affected.” This cut would save $234 million over the 2017-2026 period. But, the savings would be offset by increased spending for other Medicaid services, such as additional births from decreased access to family planning services.
You can bet that you will hear the R&T’s saying they folks can get these services in their local Community Health Centers. In fact, the AHCA proposes increasing funding for the Community Health Center Program that provides grant funds to health centers by $422 million over the 2017-2026 period. I am a big fan of community health centers and I am very happy that their funding will be increased. But we need to put this into perspective. According to HRSA, there were 1375 health centers participating in the Health Center program in 2015. So, this increased funding translates into $30,691 per year per health center—or about .5 of an FTE assuming you can find a provider to work for $60,000. We need more funding for Community Health Centers for sure…we also need Planned Parenthood.
More to come
There is much more in the CBO report that isn’t covered in this post, including how what remains of Medicaid will be funded (per capita limits and block grants), estimates of the impact of the changes on employer-provided healthcare, a requirement to maintain coverage or face a 30% surcharge, and the ability for insurers to charge older people premiums that are five time, instead of three times, what younger people pay. And then there is the repeal of the surtax on certain high-income taxpayers net investment income and repeal of the Hospital Insurance payroll tax rate for certain high-income taxpayers. I could go on and on, but I fear that I may have already exhausted you.
So, let me sum up the AHCA and the CBO report by saying:
If you are rich, the AHCA is the gift that keeps on giving…if you are poor, well what difference does it make because as we recently learned from Representative Roger Marshall (R-Kan) a doctor who is also a congressman, that “Just like Jesus said, ‘The poor will always be with us…There is a group of people that just don’t want health care and aren’t going to take care of themselves.” Amen, brother, may you be rewarded at the polls (NOT!).