AHCA

The CBO’s First Findings on the AHCA/RepubliCare.

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The Congressional Budget Office(CBO) released its findings on the American Health Care Act(AHCA) which is also being called TrumpCare, RyanCare, and RepubliCare depending on who you ask. Their full summary can be read here. It is the first part of the GOP replacement for Obamacare and Paul Ryan wants the bill voted on in the house by Easter, but before we look at the findings, let’s recall some key things about the CBO.

The agency’s director is Keith Hall. He is an economist and was George W Bush’s pick for Commissioner of the Bureau of Labor Statistics. He has many traditional Conservative Economist beliefs including raising the minimum wage is bad and regulations are harmful. In February of 2015 House Republicans appointed him as director of the CBO.[1] This is important given that we should expect an agency under this man’s watch to either be neutral and data driven, or to lean right in their analysis.

Over the weekend several key Republicans preemptively took shots at the CBO and what they might find. From White House Budget Director Mick Mulvaney, “I love the folks at the CBO, they work really hard, they do, but sometimes we ask them to do stuff they’re not capable of doing, and estimating the impact of a bill of this size probably isn’t the – isn’t the best use of their time,” From White House Economic Adviser Gary Cohn, “We will see what the score is, in fact in the past, the CBO score has really been meaningless.”[2] The White House was clearly bracing for this report, so let’s dig in to what it says.

Number of Insured

In January the President said, “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.”[3] According to the CBO there will be 14 million more uninsured people next year and 24 million more uninsured people by 2026. Both of those numbers are compared to the projections for uninsured under Obamacare. Twenty four million people is the rough equivalent to the combined populations of Vermont, Alaska, North Dakota, South Dakota, Delaware, Montana, Rhode Island, Maine, New Hampshire, Idaho, West Virginia, Nebraska, New Mexico, Kansas, and Wyoming. Those 14 and 24 million are largely from one demographic though, the poor.

As you can see, the CBO estimates those living at 200% or less of the federal poverty level are hit the hardest. That would be a single person making $23,760 a year or a family of four making $48,600 a year. Particularly troubling is that age 50-64 column where the uninsured rate nearly triples.

Insurance Premiums

This one is more complicated. The CBO estimates that by 2019, premiums on the individual market place would increase 15-20% over the Obamacare numbers, but would come in 10% under the 2026 Obamacare estimates. Once again though, there is a group paying a disproportional penalty. Prior to the release of the CBO numbers, the AARP ran some estimates too and found a 64-year old earning $25,000 a year would see an increase in their premiums of $7,000.[4] The CBO disagreed and predicted a 64-year old earning $26,500 a year would have an increase in their premiums of $12,900. They would go from a net premium payment of $1,700 under Obamacare to $14,600 under the AHCA. That would mean a full 55% of their income would be going to their insurance premiums. The AARP had come out strongly against this bill before and I imagine there will be some heavy lobbying from them now.

Impact on Deficit

Over the next decade, the AHCA is expected to reduce the federal deficit by $337 billion over ten years. It was nearly a guarantee that this bill would cut from the deficit since it is being passed under reconciliation rules. This bill is technically a budget bill which is why it only needs a simple majority in both the house and the senate and therefor avoids the potential of a filibuster from the Democrats.

The bill largely accomplishes this with cuts to Medicaid. I was impressed they managed to remove the tax hikes from the ACA for top earners and still hit that number. This bill give a tax cut to the top 1% of earners of $33,000 and a tax cut to the top 0.1% of earners of $197,000. Less taxes on the wealthy and a budget deficit reduction are bound to get some big cheers from the GOP.

Expected Debate Points

The question now is will the tax hikes and deficit reduction be enough to sell the American people on the idea of 24 million people losing coverage and premiums increasing by over 700% for some of our citizens. There are three ways I’ve seen it spun so far.

  1. The CBO is wrong in general. I gave some quotes at the start of this article from this weekend. Since the report has been released, Health and Human Services Secretary Tom Price has stated, “We disagree strenuously with the report,”[5] The tricky part is cherry picking what to reject. It’s tough to say the report is entirely awful except for the part about the deficit reduction. It should also be noted again that the person running the CBO was appointed by Paul Ryan and is himself a lifelong conservative, so it would seem strange if he was biasing the numbers to hurt the party.
  2. The CBO doesn’t have all the numbers. It is true that the CBO estimate is just based on this bill and it isn’t the entire GOP plan. Trump has claimed there will be Phases 2 and 3. Those phases will be trickier since they can’t be passed under reconciliation rules and therefor can be filibustered by the Dems. Republicans are claiming that the rest of the plan, which hasn’t been released and we can’t see, will solve the issue of the rise in the uninsured. This sets up a dangerous showdown later on because if the AHCA passes as is then I’d predict Trump putting major pressure on the Dems to pass the rest. He’ll say if they don’t vote for it then all the uninsured will be their fault, essentially taking those 24 million people hostage to pass whatever is in the remaining two phases of the plan that we might not even get a chance to see publicly until after a senate vote on what has been proposed so far.
  3. The numbers don’t matter. There is a group of Republicans who philosophically believe that health care is not something the government should provide at all. They believe it should be entirely left to the free market. I’ve seen comments today on conservative message boards praising this bill as fighting back against tyranny and that this is people reclaiming their liberty. To this set of people it could remove coverage from every single person in the country, but they’d still think it would be better for everyone because it reduced the deficit and allowed capitalism to solve the issue. I don’t want to spend too much time rebutting this, because I disagree fervently with this stance, but it’s still important to remember that several congressman and senators are approaching the healthcare problem with this mindset.

Final Thoughts

In January, Obama had a message for the GOP, “I am saying to every Republican right now: If you, in fact, can put a plan together that is demonstrably better than what Obamacare is doing, I will publicly support repealing Obamacare and replacing it with your plan.”[6] The numbers from the CBO make it clear that Obama will not be supporting this bill. The numbers also make it clear that Trump’s campaign promises of providing better and cheaper healthcare coverage for everyone are not fulfilled by this bill. Is it possible Phases 2 and 3 could solve all the issues? Theoretically yes, but like the CBO I can only go off what has been released, and if this is the best the GOP can do after promising for seven years they had the silver bullet for our country’s healthcare woes, we just needed to give them full control over the whole government, then we’ve been severely lied to.

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