Caution is in order about the “lower” or “falling” premiums spin congressional Republicans such as House Speaker Paul Ryan and Minnesota’s Rep. Jason Lewis are putting on a new, abysmal analysis of their party’s Obamacare replacement plan.
On Monday, the nonpartisan Congressional Budget Office released its review of the American Health Care Act — the name given the GOP proposal. CBO’s assessment of its impact on coverage is brutal: In 2026, the number of uninsured Americans will top 52 million, an increase of 24 million over what it would have been under the Obama law.
The agency does indeed conclude that the bill would eventually result in individual market insurance premiums being 10 percent less on average than what would they would be under the current health reform law — but not until 2026. Another critical caveat: Not everyone, particularly not older Americans, would see savings.
The nearer future would likely be more painful across the board if the bill passes. The CBO estimates that premiums would be 15 to 20 percent higher than under current law in 2018 and 2019. To be clear, those premium increases would be on top of what is already projected under Obamacare for individual market buyers — the narrow slice of people who don’t get coverage through employers or public programs such as Medicare or Medicaid.
While premiums are projected to start declining on average after 2020, older Americans may still see bills rise. The Republican plan would reduce Obamacare tax credits that many older consumers rely on to buy insurance. At the same time, the GOP plan would allow insurers to charge them up to five times more than younger people. Potentially, many older consumers, such as those who are retired but haven’t hit the Medicare eligibility age of 65, could be priced out of the market.
Those remaining in the individual market would eventually be younger and healthier, requiring less medical care and thus fewer premium dollars to cover costs. That transition is certainly one way to stabilize the individual market, which saw dramatic premium increases in Minnesota and elsewhere under Obamacare. But the trade-off is that more older people might be uninsured or underinsured. That shouldn’t be glossed over as President Trump and Republicans ramp up efforts to sell the plan.
The CBO analysis of how many more people would lack coverage under the GOP plan ought to alarm all Americans. The uninsured don’t magically stop getting sick. The cost of their care is borne by taxpayers through an inefficient patchwork of programs — such as subsidies to hospitals for uncompensated care, or through government-subsidized and often underfunded “high risk pools” for those with expensive medical needs. Those with employer insurance also might bear some uncompensated care costs through higher premiums.
Some of the uninsured would go without coverage by choice, since the GOP plan replaces the mandate to buy insurance with a weaker penalty for those who wait until they’re sick to buy insurance. But others will lose their coverage due to unaffordability and because of cuts to another program — Medicaid, the joint federal-state program that covers low-income people. The Obama reforms expanded Medicaid eligibility. The GOP proposal would gradually reduce federal funding for the expansion. But the party’s proposed Medicaid funding changes alarmingly go beyond that.
Medicaid pays for much of the nation’s nursing home and long-term care costs. Beginning in 2020, the GOP plan would reduce federal Medicaid funding by setting a cap on what it pays per enrollee. The CBO projects that Medicaid spending would grow by 4.4 percent annually, while the feds would increase the cap by 3.7 percent annually. The 0.7 percentage point difference is significant when Medicaid’s budget tops $500 billion a year. The annual shortfall would blow a hole in states’ budgets if they want to make up the difference. Or, states would be forced to reduce eligibility or benefits — a troubling development when aging baby boomers will create unprecedented demand for long-term care services.
The Medicaid cuts are a key reason why doubts are growing about the U.S. Senate passing the bill. But those raising objections to it need to do more. Yes, this dubious plan merits strong opposition. But it also merits a more thoughtful response: a better health care reform plan with bipartisan input and appeal. Rising premiums in Minnesota and elsewhere under the Obama reforms require serious solutions. The Republican plan does not offer them. Those opposing it can and must do better.