For days, the political world had been waiting nervously for the Congressional Budget Office’s assessment of the House Republicans’ Trump-endorsed proposal to replace Obamacare. On Monday afternoon, when the numbers-heavy report finally appeared, one figure it contained dominated all the others: twenty-four million.
This was the C.B.O.’s estimate of how many fewer people would have health insurance if the Republican legislation—which is called the American Health Care Act—passes. In 2018, the first year that many of the bill’s changes would go into effect, fourteen million “more people would be uninsured under the legislation than under current law,” the report said. The difference “would rise to 21 million in 2020 and then to 24 million in 2026.”
By anybody’s terms, twenty-four million is a lot of people. It is far larger than the figure of fifteen million that two economists from the Brookings Institution had suggested last week that the C.B.O. might come up with. “To put the 24 million coverage loss in perspective, that reverses the entire coverage gain from the ACA,” one of the Brookings economists, Loren Adler, said Monday on Twitter.
As recently as January, Trump was promising that his Administration would provide “insurance for everybody.” Even for a President whose acquaintanceship with the truth is a casual one, explaining away the figures in the C.B.O. report could be tricky. It was not surprising, therefore, that the White House quickly dispatched Tom Price, the new Secretary of Health and Human Services, to rubbish the C.B.O. analysis. “We disagree strenuously” with the coverage estimates in the report, Price told reporters at the White House. Prince insisted that the G.O.P. plan would “cover more individuals at a lower cost.”
Price didn’t provide any numbers to back up this claim. He hasn’t got any. (In fact, on Monday night, Politico reported that the White House’s own internal analysis of the health-care bill projected that twenty-six million fewer people would have coverage over the next decade.) The only thing that the Administration and its allies on Capitol Hill have to fall back on is the vague promise to follow up the A.H.C.A. with a second piece of legislation that would give insurers more freedom to offer cheaper, lower-quality plans, which, in turn, might persuade more young and healthy people to sign up. But that’s a pie-in-the-sky promise. Changing the rules for insurers would require sixty votes in the Senate, which the Republicans don’t have.
The C.B.O. analysis didn’t account for the possibility of insurers being able to offer cheap and lousy plans. The main thing driving its conclusions wasn’t changes to the individual market, but the House Republicans’ reckless and deliberate assault on Medicaid, the federal program that provides health care for the poverty-stricken and the working poor. In estimating that twenty-four million people stand to lose their insurance coverage, the C.B.O. said that fourteen million of this total would be accounted for by reductions in Medicaid rolls.
It is important to understand how this estimate was arrived at, and why it is reasonable. Under the Affordable Care Act, the federal government lifted the income threshold for Medicaid eligibility to nearly a hundred and forty per cent of the poverty line. At the same time, Washington also promised states, which administer Medicaid, that it would pay ninety per cent of any costs entailed in this expansion. Thirty-one states, including sixteen that now have Republican governors, took the feds up on this offer. The G.O.P. bill would end the Medicaid expansion in 2020—sooner, possibly, if the White House accedes to demands from ultra-conservative groups. The legislation would also change the way the rest of the Medicaid system is financed, shifting to a “block grant” model in which Washington would pay a fixed amount to the states for each recipient.
As a result of these changes, the C.B.O. report said that “some states would discontinue their expansion of eligibility, some states that would have expanded eligibility in the future would choose not to do so, and per-enrollee pending in the program would be capped.” The end result would be a big drop in enrollment and also a big drop in spending—$880 billion over ten years. “By 2026, Medicaid spending would be about 25 percent less than what CBO projects under current law,” the report says.
The drop in spending on Medicaid helps explain why the C.B.O. estimated that the G.O.P. reform would reduce the deficit by $337 billion—a fact that some Republicans seized upon. But why, you might ask, would the deficit be reduced by just $337 billion over ten years, when spending on Medicaid would fall by $880 billion? The answer is that the bill would take most of the money that is saved from reducing Medicaid and hand it out to rich people in the form of tax cuts. The legislation would abolish the 3.8 per cent Medicare tax on investment income and the 0.9 per cent surtax on ordinary income that the A.C.A. applied to people who make more than $250,000 a year. According to the C.B.O., the bill would reduce tax revenues by $597 billion over ten years.
If the Republicans really wanted to fulfill Trump’s promise of insuring everybody—or, at least, preventing a big fall in insurance rates—they could have taken this $597 billion and used it to maintain the Medicaid expansion, or at least to enlarge the new tax credits they want to offer for the purchase of individual insurance, which, in some cases, would be much smaller than the subsidies offered under Obamacare.
And I mean much smaller. In a table at the end of its report, the C.B.O. provided some “illustrative examples” of how different types of people might fare under the new system. Take a single sixty-four-year-old with an annual income of $26,500. Under Obamacare, after receiving a generous federal subsidy, this person would pay $1,700 in annual premiums. Under Trumpcare, or Ryancare, or whatever we want to call it, this person would pay $14,600. That’s an increase of $12,900!
To be sure, the way the new system would be set up, not everybody would be a loser. For example, a single forty-year-old with an annual income of $68,200 could end up saving more than four thousand dollars a year, according to the C.B.O.’s figures. But in general, people would pay more, at least in the early years after the measure goes into effect.
In the first few years, as some healthy young people drop their insurance plans because they are no longer mandated to purchase them, premiums would go up fifteen or twenty per cent, the report says. After 2020, average premiums could start dropping, and by 2026 the C.B.O. projects they would be ten per cent lower than under the current law. But that would mainly be because insurers would be offering cheaper, crappier plans to young people, and older people would be dropping insurance because they could no longer afford it. It will be interesting to see how Trump tries to sell that prospect to his supporters, many of whom are older and living on modest incomes.