The CBO projection finding the House Obamacare repeal bill would mean 24 million more uninsured may be politically toxic, but its conclusion the bill would cut the deficit gives Republican leaders a green light to press on with a plan they say will save the U.S. health care system by cutting taxes, regulations and entitlement spending.
The Republicans have cast themselves as hard-headed saviors of a broken system in which Americans are forced to buy coverage they don’t want and can’t afford. But the numbers CBO issued Monday won’t make for an easier sell. Moderate and conservative critics alike are sure to be emboldened by forecasts that directly undercut President Donald Trump’s repeated promise that everyone would be better off under the Republican plan.
While Republican leaders publicly criticize the nonpartisan scorekeeper’s projections of massive coverage losses, they’re sure to play up the way it would cut the deficit by a projected $337 billion over a decade. But Democrats trying to save their health care law will be sure to keep hammering away at that 24 million figure as proof Republicans are shredding an essential safety net.
Here are five important takeaways from Monday’s CBO report:
Trump voters would take a hit
Every piece of health care legislation has winners and losers. In this case, the CBO says the clear losers would be older, low-income Americans between 50 and 64, just below the Medicare eligibility age.
In other words, a lot of Trump voters.
The budget-cruncher’s assessment boils down to two main factors: How the GOP plan’s age-rated tax credits stack up to Obamacare’s income-based subsidies, and how much more insurers are allowed to charge older Americans.
Obamacare subsidies cap the amount anyone has to pay for coverage as a percentage of income. That means that when premiums rise, subsidies rise too. The GOP plan would instead provide older Americans with a $4,000 tax credit that begins to phase out for individuals earning above $75,000. And the Republican bill allows insurers to charge older enrollees five times as much as younger enrollees, while Obamacare limits that ratio to 3:1.
The CBO report lays out a stark example of how older and poorer Americans would be hurt by the GOP bill. If Obamacare were still in place in its current form a decade from now, a 64-year-old earning $26,500, or just less than twice the federal poverty level, would pay $1,700 for premiums in a year after accounting for federal assistance. Under the GOP plan, a 64-year-old at the same income level would pay $14,600 in premiums for coverage that would also have higher out-of-pocket costs.
It’s a startling hypothetical that of course is just a projection, but it should be a scary one for Trump World if they’re worried about protecting their base.
Medicaid bears the brunt of the cuts.
The Republican plan would be paid for with an eye-popping $880 billion cut to the health entitlement for the poor, elderly and disabled over a decade. That’s sure to send a jolt to governors who rely on federal Medicaid funds to keep their programs going and their budgets balanced.
In all, CBO projected that total Medicaid spending would be 25 percent less in 2026 than under current law. The bill would keep Obamacare’s Medicaid expansion through 2019 before winding it down, though some conservatives want to begin gutting it earlier.
The CBO projections could give more weight to governors and senators from states that expanded their programs under Obamacare and could be forced to drop low-income people from their rolls. And they’ll fuel Democrats’ narrative that people who signed up for coverage under the 2010 health law will fare much worse under the House GOP plan.
Sen. Joe Manchin (D-W.Va.), among the most conservative Democrats, who is up for re-election in 2018, said on Monday the bill is “morally wrong.”
“To do what they’re doing right now is absolutely unconscionable,” Manchin said. “It’s just awful … There’s got to be a moral compass inside somebody.”
“Can’t sugarcoat it, it doesn’t look good, does it?” observed Sen. Bill Cassidy (R-La).
Employer coverage could decline
While the repeal bill primarily deals with the individual insurance market for people who don’t get coverage at work and Medicaid, the CBO projects that employer coverage would drop by 7 million over a decade.
It’s a bit of a sleeper issue in the CBO report, but it shows another political risk for Republicans. Despite all the hand-wringing over Obamacare the last seven years, the law’s marketplaces affects just a small slice of the private market. Most people with private coverage still get it through the workplace as a popular tax-free benefit.
But the CBO report predicts some employers would choose to drop coverage without Obamacare’s employer mandate penalty hanging over them. Since tax credits would be available for a broader range of incomes, more employers would be confident workers could obtain their own coverage.
Notably, the CBO also originally predicted employer coverage would decline under Obamacare, believing more companies would push workers into the exchanges. That turned out to be incorrect — employer coverage has largely remained stable.
Death spiral? What death spiral?
The report provides a bit of good news for Obamacare supporters and detractors. Despite some instability in Obamacare’s marketplaces, the CBO doesn’t believe the health care law is facing a dreaded death spiral, in which premiums rise so high that only the sickest patients are motivated to purchase insurance. Nor does the CBO think the GOP plan would result in a death spiral.
The report says Obamacare’s income-based subsidy structure is protecting enrollees from higher premiums, which comes at a greater expense to the federal government. And the CBO thinks the individual mandate is still enough of an incentive to bring healthy people into the marketplace.
The Republican plan’s subsidies would also help bring in healthy people to the marketplace, even though they “would be generally less for those receiving subsidies under current law,” the CBO said. The bill also includes a $100 billion fund to help states cover vulnerable patients, which the CBO thinks would help insurers keep down premiums.
Republican credibility took a hit
On Sunday, HHS Secretary Tom Price said on NBC’s “Meet the Press” that he thinks coverage will expand and financial burdens will decrease under the GOP plan. That’s not looking so good in light of the CBO assessment.
The GOP says the bill is only the first piece of a three-legged health care strategy that also includes sweeping regulatory changes, as well as more health bills that are likely to get blocked by Democrats in the Senate.
It’s tough to guess how long Republicans can carry the day with a “trust us” argument, with spooked conservatives and moderates both peeling off and many health industries wary of the party’s replacement plans.
Price and others are already attacking the CBO for reviewing just the first part of the replacement plan. But that ignores the fact that the CBO is only supposed to analyze legislation that has been introduced — and not take into account extraneous promises from the White House and GOP leaders about what else may or may not happen down the road.
In an added twist, it was Price, as a Georgia congressman and chairman of the House Budget Committee, who in 2015 lauded the selection of the CBO director whose analysis he tore into.
Sarah Ferris contributed to this report.
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