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Thursday, May 25, 2017

What Are the Folks At the CBO Taking?

The CBO report on the healthcare bill passed by the House came out earlier this week.  It's a complicated document that seems to have been written in Fantasyland.  Charles Darwin based his theory of evolution on Natural Selection.  It seems that the CBO based its analysis of the healthcare law on something best called Illogical Selection.  Let me explain.

1.  When Obamacare was passed, the CBO predicted a marked increase in the number of American who had health insurance.  By 2017, we were supposed to see about 23 million people with policies purchased on the Obamacare exchanges.  The actual number has turned out to be just under 11 million people with such policies.

2.  That number of 11 million people with Obamacare policies is important, because in this week's exercise in bizarre thought, The CBO is predicting that ten years from now 23 million fewer people will have health insurance policies if the bill passed by the House becomes law.  This is a strange prediction since the CBO also predicts that the premiums for insurance policies will be lower if the bill becomes law, so it won't be increased cost that will drive people away from insurance.

3.  You may wonder how it is possible with only 11 million Obamacare insurance policies for the total number insured to decline by 23 million.  The answer from the CBO is that people on Medicaid will no longer be insured.  That's ridiculous, however.  Medicaid is free; no one would drop it since it has no cost.  What is more, anyone who is on Medicaid now is assured of staying on that program into the future so long as they meet the current requirements of that program.  Now there will surely be some people who progress in life and get better jobs and higher incomes.  If these people have a high enough income to exceed the requirements for Medicaid, that is a good thing.  It means people who were living in poverty have pulled themselves out of poverty.  Many of this group will get health insurance through their jobs, and only a small number will have to buy insurance individually.  There will never be enough to get to one million people needing insurance.  Certainly, there will not be enough to make up an extra 12 million people needed to get to the CBO prediction of 23 million.

4.  The truth is that there really is no rationale how CBO could come up with its 23 million person estimate. Most people with Obamacare policies will still buy policies under the new law.  Essentially everyone on Medicaid will keep that coverage or get coverage from their employment.  The only other place from which CBO could find people who might lose coverage is among people who get their coverage through their jobs.  CBO can argue that by removing the employer's mandate which requires large employers to provide health insurance for workers, millions of employees will be left without coverage as businesses drop insurance coverage.  That might make sense if the original passage of Obamacare with its employer's mandate had brought a wave of new employees getting health insurance.  The government's own statistics, however, show that there was essentially no change in the number of people getting insurance through their jobs.  If enacting the employer's mandate did not add people to coverage, it is hard to argue that rescinding that mandate will result in something like ten million people losing coverage.

The reality is that the CBO estimate is nonsense.  (And that's putting it nicely.)

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