The CBO Report on the American Health Care Act

We've all been waiting for the Congressional Budget Office to weigh in on the AHCA and their report came out yesterday.  I spent some time last night and again this morning reading through it and I can say that I didn't really find any surprises there.  The conclusions contained it in are no different than what any reasonable person would have expected.

Basically, the report says that from 2017 through 2026 about 24 million people will lose their health insurance either involuntarily or by their own choice.  It also says that the AHCA will reduce the federal deficit by $337 billion over the nine year period by reducing benefits paid through Medicaid and by reducing government subsidies people receive today to help pay for their health insurance.  There were no surprises there, although I didn't realize that the number of people who will lose coverage was quite that high.

The report says that about 14 million people will lose insurance in 2018 and more will drop off each year after that.  The initial reduction will be due to higher premiums and individuals electing to no longer purchase insurance because the mandate to do so will be eliminated.  The report says that premiums will increase for the first 2 years and then begin to drop after that.  I think that the premium increases will price many people out of the market.  Unfortunately, there is a provision in the AHCA that says insurers can charge a 30% premium penalty for anyone who has been without insurance for over 63 days.  

The 63 day provision means that, if you think you can cancel your current insurance and then reinstate it a couple of years from now when premiums decrease, you are dead wrong.  The CBO estimates that after the initial two year period, insurance premiums will eventually go down by about 10%, which would either put them at about the same cost as we're seeing today or slightly lower.  The 30% premium penalty would put your premium cost 20% higher than you pay today.  The net effect is that this provision will price a number of people out of the insurance market and they won't be able to afford to get back in.

The report also doesn't discuss the cost of having a greater number of uninsured people in our population.  When people can't afford healthcare but they really need it, they simply don't pay for the care they receive.  This results in healthcare providers having to absorb those costs, which increases costs for the rest of us.  This in turn increases insurance costs and raises premiums for those of us paying for insurance.  

The report also says that part of the savings will be realized by reducing Medicaid benefits, capping Medicaid payments, and tightening Medicaid eligibility criteria.  You don't have to be Albert Einstein to understand this part.  It will be harder to qualify for Medicaid and, if you manage to qualify for it, then it won't pay as much.  By capping payments, you can exhaust your benefits.  If you're halfway through an expensive chemo regimen and you hit the cap, then you'll need to rethink your life strategy unless you can come up with a lot of cash.

AHCA is also particularly hard on seniors.  It allows insurance companies to charge up to five times as much for insurance as young people will pay.  You might think that seniors are in a good place when it comes to their finances.  Some of them are, but most of us older Americans have come to the realization that retirement just isn't in the cards for us.  Either we haven't been able to save at a rate that keeps up with inflation or we just haven't been able to save enough to support ourselves when we retire, period.  Increased premium costs will undoubtedly price many of us out of the insurance market permanently.

There are other provisions of the Act that are very favorable to insurers, both in terms of tax breaks and in the ability to offer reduced coverage at higher prices.  You'll have to read it if you want to learn about those.  You can read the Act for yourself here.  

I guess I can sum up my opinion of the AHCA by saying that it's going to be very hard on low income Americans and it will be beneficial to insurance companies and higher income Americans.  It will certainly reduce the deficit, but if you consider this reduction in proportion to other possible avenues for budget reduction, it's a relatively small amount.  Especially when you consider how many people will be negatively impacted.  I'm angry about it, but I expected that and it's no surprise that Republican lawmakers would propose legislation that benefits the wealthy and big business and do it at the expense of low income Americans.  They have a history of doing that while they're telling us that they're making our lives better.

What really makes me angry, however, is the way they're presenting it to the American people.  Obamacare has been painted as the root of everything that's wrong with our country and, for the most part, people are believing that.  Republicans are putting a positive spin on the CBO report by emphasizing the deficit reduction, but ignoring the fact that 24 million people will become uninsured.  If you look at Paul Ryan's summary of the CBO report, then AHCA looks like a no-brainer.  If you look past the sound bites designed to play on your emotions rather than your intellect, then the story is much different.

Take a minute and think this through.  Look at Paul Ryan's pitch and then look at the actual CBO report and make a decision for yourself.  You might discover that AHCA has a pretty high price after all.