On Monday the Congressional Budget Office (CBO), the nonpartisan research arm of Congress, released an analysis of the Obamacare replacement proposed by Republican Speaker of the House Paul Ryan. According to the document, 14 million fewer Americans would have health insurance by 2018 under the plan, and that figure would rise to 24 million by 2026.
Health and Human Services secretary Tom Price told reporters following the analysis' release, "we strenuously disagree" with the findings. Trump told the Washington Post in January, "We're going to have insurance for everybody. There was a philosophy in some circles that if you can't pay for it, you don't get it. That's not going to happen with us."
Altogether, 52 million people would lack health insurance in 2024, compared to a projection of 28 million under current law. Much of that increase would come as a result of the repeal of the individual mandate, which penalizes those who do not purchase health insurance. Many currently insured people, the CBO writes, "chose to be covered by insurance under current law only to avoid paying the penalties, and some people would forgo insurance in response to higher premiums." (See also, Obamacare Costs Up for 2017.)
The CBO estimates that the Republican plan would reduce federal outlays by $1.2 trillion from 2017 to 2026 and receipts by $0.9 trillion over the same period. As a result, the deficit would fall by $337 billion. Most of the reduction would come from a reduction in Medicaid spending and subsidies for non-group health insurance.
The CBO's analysis forecasts a temporary rise in health premiums under the proposed replacement. Relative to projections under current law, premiums would be higher in 2018 and 2019, though they would be lower after 2020. Eliminating the individual mandate would lessen the incentives for healthy people to sign up for insurance, raising premiums by 15% to 20% relative to current law. By 2026, however, premiums would be around 10% lower than projections under current law.
The CBO does not foresee the bill destabilizing health insurance markets; it also states that markets would remain stable under current law. Critics of both Obamacare and its potential repeal have warned of a "death spiral," in which healthy customers opt out of insurance markets, causing costs per head and thus premiums to rise, and driving more healthy people out of the market. (See also, Is the Affordable Care Act Failing?)
Republicans strongly opposed the passage of the Affordable Care Act – now known universally as Obamacare – in 2010, and President Donald Trump campaigned on a promise to repeal and replace the law, which he called a "disaster." Ryan proposed the bill under consideration by the CBO on March 7, but its reception among Republicans was mixed. Trump endorsed the proposal the day it was unveiled, though he tweeted a promise that "phase 2 & 3" would allow insurance to be sold across state lines. He promised to introduce such a reform repeatedly during the campaign, but it does not appear in the House bill. "Don't worry," Trump wrote, adding that a plan to reduce drug prices was also forthcoming. (See also, The Beginning of the End of Obamacare.)
Other Republicans were even less enthusiastic. Representative Jim Jordan of Ohio called it "Obamacare in a different form," summing up many hardliners' dissatisfaction. Moderate Republicans such as Maine Senator Susan Collins worried that too many patients would lose coverage. A number of groups representing hospitals and physicians came out against the plan. (See also, 7 Industries Benfiting From Obamacare.)
The American Health Care Act, as the new bill is known, would eliminate the penalties associated with the individual mandate. As a substitute, it would add a 30% surcharge to premiums for patients who have gone without insurance for 63 days within the past year. Beginning in 2020, it would reduce the federal matching rate for adults made eligible for Medicaid by Obamacare. It would limit spending on Medicaid beneficiaries based on the medical consumer price index beginning in 2020. (See also, Why a Repeal of Obamacare Could Be a Boon for Wealthy Investors.)
It would eliminate Obamacare's subsidies beginning in 2020 and replace them with tax credits. Beginning the same year, it would provide Medicaid funding through grants to states that are capped on a per-capita basis. It would allow insurers to charge older patients five times as much as younger ones, rather than the current ratio of three times. It would raise contribution limits to Health Savings Accounts (HSA). Beginning in 2020, it would eliminate the requirement that insurers cover at least 60% of the costs of covered benefits. (See also, 6 Things Obamacare Plans Won't Cover.)
Perhaps anticipating the tenor of the analysis, White House press secretary Sean Spicer sowed doubt regarding the CBO's competence on March 8, saying, "If you’re looking at the CBO for accuracy, you’re looking in the wrong place." In 2010 the CBO significantly overestimated the number of people who would be insured under Obamacare in 2016, forecasting that 30 million fewer people would be uninsured than if the law had not been passed. In 2016, following a Supreme Court ruling and other developments, it revised that estimate down to 22 million.
According to a document seen by Politico Monday, the White House prepared its own estimate of the proposed law's effects: 26 million people would lose insurance coverage over the coming decade, rather than the CBO's 24 million. A White House spokesman said that the estimate, prepared by the Office of Management and Budget (OMB), was "not an analysis of the bill in any way whatsoever." Rather, "this is OMB trying to project what CBO’s score will be using CBO’s methodology."