Among the devastating conclusions in the the Congressional Budget Office’s new analysis of the GOP Obamacare replacement plan, this one cannot be repeated enough: The proposal would not just balloon the number of uninsured, it would also single out the needy and vulnerable for pain. Many people would go without coverage they require. Many others would pay for lower-quality coverage they cannot use, with higher deductibles and other out-of-pocket costs.
“The legislation would increase the number of uninsured broadly,” the CBO found. But “the increase would be disproportionately larger among older people with lower income; in particular, people between 50 and 64 years old with income of less than 200 percent of the [federal poverty limit] would make up a larger share of the uninsured.” This is the result of the Republican drive to replace Obamacare’s carefully tuned insurance expansion with a much shoddier policy.
The shoddiness begins with Republicans’ replacement for the hated individual mandate, which requires Americans to maintain health coverage. The mandate exists to encourage younger and healthier people to buy into the insurance system, keeping the insurance market stable, rather than simply waiting until they are sick to seek coverage. Republicans would replace it with a policy that would do the opposite.
The GOP’s idea is to allow insurers to jack up people’s premiums if they seek coverage after going without for at least 63 days. After 2018, the CBO found, “roughly 2 million fewer people would purchase insurance because they would either have to pay the surcharge or provide documentation about previous health insurance coverage. The people deterred from purchasing coverage would tend to be healthier than those who would not be deterred and would be willing to pay the surcharge.” In other words, their individual-mandate replacement would tend to harm market stability rather than help it.
The CBO nevertheless concluded that the GOP plan would not result in dreaded insurance market “death spirals,” in which escalating costs drive everyone but the sickest people out of the market. That is in part because of a new $100 billion stability fund, and in part for reasons that are not comforting. The CBO predicts that the Republican plan would “lower average premiums enough to attract a sufficient number of relatively healthy people” into the individual health-care market — in part by “substantially reducing premiums for young adults and substantially raising premiums for older people.” In other words, more old and sick people would be priced out of the market, while young and healthy people could easily afford coverage. The insurance pool would be healthier because more sick people would be left out.
Moreover, to the extent they could, insurers would game the policies they offered to attract only healthy people. Republicans would help them by eliminating restrictions on the quality of the health policies they are allowed to sell, enabling them to slash the share of people’s health costs they would cover. Insurers could adjust the value of their plans downward “so that a younger person would have low out-of-pocket costs for premiums and would be more likely to enroll.” Meanwhile, “insurers might be less likely to offer plans with high actuarial values out of a fear of attracting a greater proportion of less healthy enrollees to those plans.” This is another way in which the market would reorient itself away from serving needy populations and toward covering healthier and wealthier people. This might result in a stable market, but it would also lead to a large increase in human misery.
Rolling back Medicaid, meanwhile, would leave many near-poor people at the mercy of this insurance market. The GOP euphemism for this strategy is “expanding choice.” Speaking of which, the CBO also found that “shopping for and comparing plans could be harder” after the bill’s deregulatory provisions take effect.
All of this to “save” Obamacare markets that require only modest adjustments, to eliminate the individual mandate and, according to the CBO, to see an eventual 10 percent cut in premiums. At this point, those who still back the GOP plan — a group that, notably, does not include a variety of liberal and conservative health-care experts — are either heartless or blind. Unfortunately, for many, those conditions appear to be preexisting.