The numbers are staggering and suggest the GOP will find it difficult to keep its promise of an “orderly transition,” unless they deviate significantly from a prototype repeal bill they passed last year.
Within the first year, the CBO predicts, 18 million people would lose insurance. In addition, premiums for people buying coverage on their own would increase, on average, by 20 to 25 percent relative to what they would be if the Affordable Care Act remained in place.
And that’s just the short-term effects that a “repeal-and-delay” strategy would have. Once Obamacare’s tax credits and Medicaid expansion expired fully, the CBO says, millions more could lose insurance and premiums would rise yet again.
Ultimately, the CBO concludes, 32 million more people would be uninsured and premiums would be twice as high ― again, relative to what they would be if Obamacare stayed on the books.
It’s a worst-case scenario that assumes Republicans can’t stabilize insurance markets during the transition. The CBO’s estimate also doesn’t consider the possibility that Republicans would replace President Barack Obama’s health care law with something else.
Republican leaders reacted to the report by emphasizing that possibility.
“This projection is meaningless, as it takes into account no measures to replace the law nor actions that the incoming administration will take to revitalize the individual market that has been decimated by Obamacare,” AshLee Strong, spokesperson for House Speaker Paul Ryan (R-Wis.), said on Tuesday.
Replacing Obamacare wouldn’t be so easy to do, however. The GOP has not settled on an alternative to Obamacare even though it’s been promising one for nearly seven years, and it remains deeply divided over fundamental questions about the government’s role in health care.
At the very least, any scheme that could get through the Republican Congress is likely to cover far fewer people or provide far less financial protection for people with insurance, given the GOP’s desire to cut federal spending on health care dramatically.
Projecting the effects of changes in health care law is hardly a science, and like all CBO reports, this one carries a significant degree of uncertainty. It also includes several key assumptions.
The prediction of quick, massive insurance losses assumes that repeal immediately eliminates the penalty for not carrying insurance ― that is, the dreaded individual mandate ― while leaving in place nearly every other element of the coverage expansion. In other words, insurers would still be subject to requirements that they sell to anybody, regardless of pre-existing conditions, and offer only policies that cover a broad swath of benefits.
These conditions would lead to severe “adverse selection” problems, as the people who expected to be healthy would be more inclined not to buy insurance ― or, at least, wait until they got sick first. Insurers would also exit markets, in large numbers as opposed to the sporadic exits so far, as they figured the market was in decline. Those that remained, the CBO believes, would raise their premiums.
In addition, the CBO expects, fewer people would sign up for employer coverage and fewer would enroll in Medicaid without the mandate in place.
Another key assumption the CBO made is that, after the transition period, the funding for tax credits and subsidies would go away, but those same regulations would remain.
In other words, insurers would still be subject to the rules on pre-existing conditions and benefits ― only now people would be even less likely to buy coverage when they were healthy, because in addition to no mandate there’d be no financial assistance for insurance premiums. And the regulations themselves would be keeping premiums high, since they require insurers to pay for expensive medical services that people with serious health problems need.
The CBO didn’t draw these assumptions out of thin air. It based them on a bill that Republicans passed, and President Obama vetoed, last year. That bill would have repealed the individual mandate immediately. Many Republicans have indicated they want to do the same thing now, because they find the requirement so burdensome and offensive.
As for leaving the insurance regulations in place, that’s a function of parliamentary procedure. Republicans have only 52 seats in the Senate ― not enough to overcome a Democratic filibuster. The only way to repeal Obamacare is to do so through the special budget “reconciliation” procedure, which is impossible to filibuster but, by rule, can only involve measures related to the budget.
While the rules are subject to interpretation by the Senate’s parliamentarian, it’s likely that Republicans would be able to use the process to eliminate only Obamacare’s funding and spending, and not its regulations.
The CBO’s estimates closely mirror a report that the nonpartisan Urban Institute published last month. “What [the CBO] is finding is very consistent with what our modeling showed,” said Linda Blumberg, an Urban Institute senior fellow and co-author of that report.
Author: Jonathan Cohn