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Monday, June 26, 2017

The CBO Follies

The Congressional Budget Office released its report on the Republican senate healthcare bill today.  There's only one way to describe the CBO's findings:  RIDICULOUS!!

Let me explain:

According to the CBO, if the bill were passed, there would be 15 million fewer people insured in 2018 than would be the case under Obamacare.  The CBO says that this number would increase to 22 million fewer people with insurance by 2027 under the senate bill than under Obamacare.

Those are the numbers in the headlines, but few people actually know how the CBO comes up with those figures.  Here's something that essentially no one has heard:  the CBO estimates that between 8 and 9 million people who the agency claims would have coverage under Obamacare in 2027 would get that coverage when their states decide to expand Medicaid coverage.  That is crazy.  When Obamacare was passed, states were required to expand the eligibility for Medicaid or lose certain benefits.  That rule was challenged, and the Supreme Court struck it down.  The Court held that states had the choice whether or not to expand Medicaid coverage, and that the states that kept the old definition could not be penalized for making that decision.  As a result roughly half the states did not expand Medicaid coverage.  These states have kept the old Medicaid coverage standards for the last five years.  The CBO, however, assumes that all of these states will suddenly decide to adopt the wider Obamacare standards even though the cost of doing so would be high.  Simply put, that's crazy.  States that didn't opt for wider coverage during the period when the federal government pays the entire cost, are unlikely suddenly to change their minds when the feds no longer pay the whole cost.  What all this means is that just under half of the supposed increase in the number of uninsured is the result of a crazy assumption by the CBO.

Here's another little known fact:  the 15 million additional uninsured in 2018 simply cannot be.  Under the senate bill, Medicaid coverage is unchanged in 2018.  Since Medicaid remains free for those who qualify, no one is going to drop out of the program because of a change in the law.  There are only just over ten million people with policies purchased on the Obamacare exchanges in 2017.  Surely some will choose not to renew their policies once the individual mandate is gone, but that is highly unlikely to be more than one or two million people.  Most of the people buying individual insurance will want to keep being insured, and remember that under the Senate bill, there will still be subsidies in 2018 for those who need help with the premiums.  So where does CBO come up with its 15 million figure?  The answer is that CBO assumes that private employers who now provide healthcare coverage will drop that as soon as the law no longer requires it.  Indeed, some 13 million employees are supposedly going to lose that coverage.  Again, that's ridiculous.  For the last four years, premiums have gone up and up and up.  Employers with fewer than 50 employees were not required by law to keep providing insurance, yet between 98 and 99% have done so.  There have been almost no employees who lost coverage as a result.  The employers realize that they must provide coverage if they want to keep their employees from leaving for other jobs.  This will be the same once the employer mandate is gone.  It is crazy to assume that large employers will drop coverage when small employers who find it harder to finance the costs have not dropped coverage.  Remember, the CBO itself says that premiums under the senate bill will be 30% lower than under Obamacare, so there is a clear reason why MORE employers would provide coverage under the Senate bill than under Obamacare.

So put all this together and you find that in 2018, the CBO has overestimated the number who lose insurance by something like 13 million people.  Add to this the 8-9 million who come from the CBO's imaginary assumptions about more states adopting new Medicaid qualification rules, and you find that nearly the entire 22 million people that the CBO estimates will lose coverage by 2027 are not really there.

This analysis is clearly too complicated to interest most people.  They just hear the bogus total number.  The truth is something quite different.  We need to get the word out.

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