A “Replace” by Any Other CBO Score

Chris Medrano

The Congressional Budget Office (CBO) recently released an updated score of the American Health Care Act (AHCA), the proposed Republican replacement for the Affordable Care Act (ACA) or Obamacare.

At face value, the numbers are awful. Over the next decade, the report says 23 million people would lose their insurance under the AHCA.

But not all is at it seems.

Even a quick glance at the CBO’s methods show the 23 million number is incorrect and their entire report is seriously flawed.

How can anyone say that for certain? Consider Peter Suderman’s shocking observation:

Notably, 23 million is the exact same number that CBO projected for a simple repeal of Obamacare with no replacement at all. That’s worth dwelling on for a moment. CBO is saying that, in terms of coverage, the GOP bill to replace Obamacare would not be any different than repealing the existing health care law outright and replacing it with nothing.

Something just doesn’t add up. Obviously, some people would lose coverage under the AHCA, but surely it wouldn’t be the same number as a full repeal. The AHCA retains too many of Obamacare’s provisions to credibly believe it would result in the same number of uninsured people. These provisions include the option for states to keep Obamacare’s regulations, a fund for high risk pools, and a tax credit structure that would also help some retain coverage.

The reason the CBO’s score of the AHCA is flawed is because it was based on the CBO’s overly-optimistic projections on Obamacare’s coverage.

Flawed Projections

The CBO has an abysmal track record of predicting coverage. Jeffrey Anderson points out that their 2013 projection for exchange enrollment by 2016 fell short by 24 million people.

In March of 2016, the CBO predicted that under Obamacare, 18 million people would be enrolled in the exchanges by 2018 and 28 million would be enrolled by 2026.

The 2016 projections are currently on track to fall short. CMS reports that only 12.2 million people have signed up this year. At this pace, There is no credible way the Obamacare exchanges can reach 18 million by 2018.

The CBO is projecting coverage under the AHCA will meet their projections of Obamacare. But their Obamacare projections have fallen far short, so the CBO is assuming the AHCA will rip healthcare out of the hands of people who won’t have it in the first place.  That’s why the Center for Medicare and Medicaid’s (CMS) assessment is probably more realistic. Their analysis says that 13 million, not 26 million, would lose coverage over the next decade.

Taking Coercion into Account

There is another important political point about the CBO’s AHCA projections. It is misleading to tout coverage as a sign of success when Obamacare currently forces people to buy coverage. As Chris Deaton notes, part of the CBO’s coverage projection relies on people who voluntarily decide not to buy coverage when they are no longer forced to. He writes,

Most of that increase [in uninsured] would stem from repealing the penalties associated with the individual mandate,” the report reads. “Some of those people would choose not to have insurance because they chose to be covered by insurance under current law only to avoid paying the penalties, and some people would forgo insurance in response to higher premiums.”

A Better Metric

To be clear, coverage numbers should not be the primary metric for success and the AHCA also has flaws that would continue to distort the market. But the CBO’s numbers need to be addressed because they will continue to form public opinion of what an actual market-based repeal would look like.

Going forward, the main goal should be to make healthcare affordable, not subsidize unaffordable coverage. Repealing Obamacare’s misguided regulations is the first step. Afterwards, Congress and the states should pass additional legislation to address the coming doctor shortage, high drug costs, and the lack of portability when people change jobs or move to a different state.

Instead of trying to tweak an unsustainable system, Congress should deliver on its promise to deliver fundamental reform. They should remove barriers to choice and competition, which would incentivize healthcare providers to fiercely compete to serve consumers.

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