The Congressional Budget Office says if the House Republican healthcare plan were implemented (the American Health Care Act) by 2018, 14 million more people would be without health insurance. This is a huge, scary number and Democrats have been hammering the Republicans with this “fact.”
In response, Republicans have argued that that the CBO has been wrong before and this report is simply another mistake. Why, they say, should this earnest and well-meaning group of bureaucrats be given such attention given their track record? While this Republican criticism sounds awfully self-serving, and such criticism by politicians usually is, in this case it happens to be correct.
Consider that 5 million of the 14 million increase in uninsured people will come from declining Medicaid enrollment in the next year or so. But how can this be, when the AHCA does nothing to Medicaid until 2020? The answer, according to the CBO, is that the repeal of Obamacare’s individual mandate will cause 5 million people to drop what is now free health insurance coverage. Sound wrong to you too? It should because it is, or at least, is as wrong as it is right.
How did the CBO come up with this figure? While the CBO is a bit murky about what is in its microsimulation model, the 5 million people is almost surely derived from one study published in 2016 by Benjamin Sommers and colleagues. Notably, Sommers served as a senior advisor in the Department of Health & Human Services from Sept. 2011 to June 2016. In that study, researchers estimated that 40 percent, or 8 million of the 20 million people that gained insurance, were those who were always eligible for Medicaid even before the Medicaid expansions associated with Obamacare. According to researchers, these people came out of the “woodwork” to enroll in Medicaid because of the Obamacare individual mandate and the media buzz surrounding it, and changes in Medicaid enrollment procedures that made it easier to enroll.
So, now that the AHCA will repeal the individual mandate, the CBO guesstimated that 5 million of these 8 million “woodwork” people would now drop the free health insurance coverage and the unlimited healthcare and prescription drugs that come with it.
Just because people came out of the “woodwork,” however, does not necessarily imply that they will go back in now that they have enjoyed the considerable benefit of not having to pay for as much healthcare as they desire. To do so means giving up approximately $5,000 a year. If you think this is likely, I have a bridge to sell you.
The Republicans are on firm ground criticizing the CBO. The CBO has a difficult job. It is asked to do impossible things, like projecting what will happen when Obamacare is repealed. Since this has never happened before, it is hard, if not impossible, to reach any conclusions with much certainty.
The CBO is forced to “rewind” what happened with Obamacare to forecast what will happen with repeal and passage of the AHCA. But you cannot un-ring the bell, and thinking that you can leads to misleading conclusions that may inappropriately influence the political debate over the AHCA.
Robert Kaestner is an economics professor at the University of California, Riverside. He is an associate editor with the American Journal of Health Economics.
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